Accountant wears two hats with pride

KPMG, listing committee keep Carlson Tong busy

Carlson Tong Ka-shing is kept busy in holding down two chairmanships. He heads the stock exchange listing committee which vets new listings and determines listing policies and since April has been the chairman of KPMG on the mainland and in Hong Kong.

In his role at the exchange, Mr Tong leads the 28-member committee studying market reforms that may usher in the most extensive changes in three years.

The reforms under consideration include quarterly reporting for main-board companies, a revamp of the poorly performing Growth Enterprise Market and a review of the criteria used to calculate a public float - now determined by 25 per cent of a company's stock being owned by independent investors.

Wearing his KPMG hat, Mr Tong plots ways to expand on the mainland and recruit more staff.

At home, he and his Welsh wife Gill take care of three children - one with special needs - and three dogs, giving him little time to improve his golf and Putonghua.

Hong Kong-born Mr Tong began his career by joining KPMG UK in 1979, becoming a senior manager in 1983. He returned to Hong Kong in 1985 and was made a partner in 1989.

He specialised mainly in audits of listed companies, focusing on the construction, property development and investment industries. He has also been involved in initial public offerings.

We know your listing committee is going to give a wide range of reform proposals for consultation in the coming months, including ones concerning the public float, the GEM and quarterly reporting. Some of them are quite controversial. Do you think you can get the market to support the reforms?

The proposed reforms may be controversial but they would also bring Hong Kong into line with international practices and should benefit the market in the long term. We hope the market would be willing to accept changes.

On the GEM market reform, there is a suggestion to let the listing division executive vet listing applications and no longer require the listing committee to do the vetting. Will this proposal be expanded to the main board?

I think it is too early to go that far. The government is going to add statutory backing to the listing rules while the GEM board is going to have the reforms. Let's see how these two major proposals go before we decide if we should change the way of vetting new listings on the main board.

Some commentators said the listing committee should be filled by full-time people and not with investment bankers, lawyers or accountants who have potential conflicts of interest because their firms are also doing a lot of IPO business. Do you agree there is such a conflict?

We observe very strict rules to prevent conflicts of interest. If any of the listing candidates have a business relationship with the committee members, the members cannot sit on the vetting meeting. There is a diverse representation on the committee to achieve checks and balances.

I do not think it would work to turn the listing committee into a full-time job. Many of the members are experienced accountants, lawyers and fund managers who contribute their practical experience. How much are you going to pay them to work full time?

Regarding overseas listings, the committee has agreed to let more overseas companies list here. Are there any measures to encourage more to come to Hong Kong?

This is an important step to position Hong Kong as an international capital market in Asia - just like how London is the fund-raising centre for European companies. We want to see Hong Kong become the London of the Far East.

But I believe China will remain our main focus.

In your new role as KPMG chairman, what are your plans?

It is a challenging role that keeps me awake at night. I work with our co-chairman John Harrison to monitor and to work out the strategy of the firm, including the development of our business, the recruitment and training of our employees and many other issues. The cornerstones of our business strategy are quality growth, employer of choice, professionalism and integrity and global consistency.

China is our major focus and we have 10 offices in the mainland now and we are going to open more in the near future. We plan to hire more than 1,700 fresh graduates in Hong Kong and China and will hire another 500 experienced staff this year. This will increase our total staff to 7,000, perhaps by the end of this year. We hope to reach a 10,000 headcount in Hong Kong and China within four years and to increase this to 20,000 in 10 years.

KPMG is now the smallest among the Big Four globally. Do you think that is a disadvantage in competing with your rivals for clients? Do you plan to change your ranking by means of acquisitions?

Being the largest does not necessarily mean the best. In China, we have opened our 10th office, in Fuzhou. By adding the new headcounts this year, we are catching up with the others in the Big Four.

We audit 27 of the largest 100 listed firms in Hong Kong and they represent 39 per cent of the total market capitalisation of the top 100 listed companies. This shows we have a very high-quality client portfolio.

It is true that all other Big Four firms have made acquisitions in China except KPMG. We do not completely discount all possibility of acquisitions but KMPG has a unique culture and it is not easy to find the right target.

Some accountants have called for the government to introduce limited liability partnerships for accounting firms. Do you agree with that move?

I do not think limited liability partnership is having a significant impact on the industry because many local accounting firms have been incorporated as limited liability companies. We are more keen on seeing the government consider introducing proportional liability.

At present, when a company fails and investors sue for liability, they sue for the auditor to recover the whole losses even though the auditor may be responsible for, say, only 10 per cent of the blame. To have proportional liability is to make sure every party shoulders a fair slice of their responsibilities.

Let's turn the conversation to yourself. Why did you become an accountant?

When I graduated from high school in Hong Kong in 1971, I was not sure what I wanted to do. At that time, one of my good friends worked in a local bank whose audit firm was KPMG and still is.

She told me all the auditors from KPMG looked really smart and professional. I then found out that I could work for an accountancy firm in the UK while studying at night to become a chartered accountant. So I went to UK and got qualified and then joined KPMG, and have been with KPMG for 28 years.

You are both chairman of KPMG and the chairman of the listing committee. How do you split time between the two important roles and how do you compare them?

Most of my time is with KPMG. The listing committee has a weekly meeting at 4.30 pm every Thursday but I can prepare and read the tonnes of paper documents during the weekend. There is also a whole-day policy meeting once every quarter, and a disciplinary and review meeting every once or twice a month. Overall, the listing committee affairs count on no more than 10 per cent of my time.

Do your wife and children complain about you being too busy?

My wife is very understanding and fully supports my professional work. I have three children and all of them are very proud of my achievements. My eldest daughter, Catherine, has just returned from her studies in Sydney and now works in an advertising agency. My son Owen is now studying English and philosophy at Edinburgh. My youngest son, Chi Tat, is now 18. He has special needs because he has a severe communication disorder and cognitive problem.

We adopted Chi Tat 14 years ago and my wife in the past 13 years has been fighting for the government to have more educational places for English-speaking children with special needs.

Our adoption of Chi Tat was not planned. My wife was approached by a friend to do some voluntary foster work for the International Social Services, which arranges for overseas adoption of orphans, many of whom have some disabilities. She picked Chi Tat from a photo album and was visiting him every week in the Chuk Yuen Children's Reception Centre in Wong Tai Sin but we got attached to him and so applied to the court to adopt him one year later.

As we are English speaking at home, Chi Tat became English speaking and my wife together with some other parents found it difficult to find suitable placements for our children in English-speaking schools. So, with three other mums, she set up a charity called the Springboard Project and with the support of the Korean International School set up the first Springboard class in 1994.

Besides work and family, what do you like to do most when you are free?

I try to play golf but I play terribly because I do not have much time to practise. I also enjoy going to the movies or a concert of the Chinese Orchestra. I am the deputy chairman of the Hong Kong Chinese Orchestra.

After taking these two chairmanships, what other top job or public role would you like to do in future? Do you aim to become chairman of the stock exchange or the SFC one day?

I do not have any particular plan for my retirement, although I would be happy to continue to serve the community. I would accept whatever role that would be appropriate.

You have been a successful accountant and public figure. Do you have any regrets?

I wish I could speak better Mandarin. I think I would go to China more often to have more practice.

How do you compare yourself nowadays with 10 years ago and what do you expect you will be 10 years from now?

I am obviously older now, although I do not have much grey hair. I hope I have become wiser. My values and work and life ethics did not change with time. Ten years later, I will be retired; I hope to be able to play better golf and spend more time with my family.