There's no room for cronyism at the top

The Legislative Council's panel on financial affairs recently met to discuss the plan to split the post of the chairman of the Securities and Futures Commission (SFC) into a part-time, non-executive chairman and a chief executive officer. The move was welcomed by many people as a positive step in strengthening the SFC's governance structure by making it more independent and effective.

According to the administration, the split would align the SFC with other public bodies which have divided the functions of the top job. These include the MTR Corporation, Kowloon-Canton Railway Corporation, Hospital Authority, Airport Authority, and Trade Development Council.

These part-time, non-executive chairmen are wealthy businessmen, and trusted cronies of Chief Executive Tung Chee-hwa. They have no time to be full-time executive chairmen and do not expect substantial financial reward. By getting involved in a public service, they gain status and influence.

Some say that there is nothing wrong with such a system of appointment; other governments do the same. However, it smacks of collusion between the authorities and the business sector. Many people suspect that the administration is using various means to channel commercial and political benefits to Mr Tung's loyal supporters.

In the case of the SFC proposal, it is argued that having a chairman and a chief executive officer is not only the best practice for listed companies, but is also good for statutory regulators. But if the Hong Kong government wants to impose this structure on financial regulators, why are there no plans to do the same in the case of the Hong Kong Monetary Authority, the Office of the Commissioner of Insurance and the Office of the Telecommunications Authority?

SFC chairman Andrew Sheng told the financial affairs panel that he would step down in September and has no desire to be appointed non-executive chairman or chief executive officer. Mr Sheng said that the SFC board agreed that the concept of a division was uncontroversial, but questioned why the change was needed to be brought in so quickly. He said that many board members doubted whether the chairman could operate on a part-time basis, given the complexity and range of policy and regulatory issues that the SFC has to handle.