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Outsider lands top securities job
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LAURA CHA SHIH MAY-LUNG, former deputy chairman and executive director of the Hong Kong Securities and Futures Commission (SFC), has been appointed vice chairman of the China Securities Regulatory Commission (CSRC) by the State Council, China's cabinet.
The appointment, officially announced on February 12, marks the first time China has named an official outside the Chinese mainland to hold such a senior post in the Central Government. As vice chairman of CSRC, China's securities watchdog, Mrs Cha will hold a vice ministerial rank.
It came in the midst of a harsh crackdown by China on rampant market manipulation and other market malpractices.
It also highlights China's efforts to improve supervision of the country's problem-plagued financial markets.
“The good news is that the Central Government knows it has to use professionals. Securities markets and banking require in-depth knowledge," said Wang Chaoyong, who quit his job as an investment banker and returned to China as an adviser to the China Development Bank before setting up his own Beijing-based venture capital company.
After presiding over phenomenal gains in the markets for most of last year, the CSRC has launched a crackdown since December on fraud and share price rigging.
The campaign has hurt investor sentiment, but also has sparked hope among analysts that the markets' malpractices might be addressed.
Speaking at a press conference soon after the announcement of her appointment, Mrs Cha, a US-trained lawyer with more than a decade at the Hong Kong securities commission, described all the irregularities at the Chinese markets as typical in all emerging markets and just like those experienced by Hong Kong's stock market in the 1970s.
“No doubt there will be many challenges," Mrs Cha said.
“China is poised to embark on further reform and development of its capital market. And it's an exiting time for me to have the opportunity to participate in such meaningful work," she said. “I have a lot of work to do and it is definitely going to be very interesting."
Mrs Cha's appointment, traders and investors say, could help bolster the reform effort and add a measure of order and experience to the markets.
“Laura Cha has a very good professional reputation in Hong Kong," said Fang Xinghai, a senior executive at Galaxy Securities, China's biggest brokerage firm.
“Many people at the CSRC are still learning about regulation, they don't know it very well yet. So having an expert come in is good."
Mrs Cha believes her appointment will be followed by other outside people being brought into the ranks of the Chinese Government as China prepares to take its place in the WTO this year.
“It is an honour to become the first overseas professional to be appointed to join the Chinese Government," she said. “I think this is just the beginning of China recruiting international expertise."
New job
Mrs Cha, who completed her 10-year career in SFC on February 28, will take up her post at the CSRC and begin working full-time in Beijing in mid-March.
She told reporters soon after her appointment that she decided to leave SFC in mid-2000 shortly before friends in Beijing called to tell her CSRC would like to offer her the job. She said she agreed to work for a term of two years but declined to specify who had directly approached her.
At the CSRC, Mrs Cha will join three other vice chairmen, including Gao Xiqing who was educated at Duke University in the US and practised law on Wall Street before returning to help set up its markets a decade ago.
It is still unknown which area of work Mrs Cha will be responsible for in the CSRC and she will answer to CSRC Chairman Zhou Xiaochuan, who took the helm early last year after leading reforms at one of China's four big State-owned commercial banks.
However, with her background as a lawyer as well as being the SFC's corporate finance division head during the past 10 years, she is expected to use these experiences to help the CSRC build a regulatory framework for corporate finance issues such as takeovers, mergers and listings.
She is also expected to help the CSRC lay out a framework to improve corporate governance in the mainland as this is important in any market's development.
China's stock market is plagued by insider trading, and poor quality and transparency of listed companies, triggering the latest official crackdown, marked by probes in brokerages and listed companies.
“Both the inland and Hong Kong have realized corporate governance has great impact on listed companies and the market and it's also a key way to improve the quality of the market," Mrs Cha said. “There can be a lot work on this area."
Salary
Premier Zhu Rongji said in March last year China would welcome and offer high salaries to overseas experts, including those from Hong Kong and Taiwan, to help develop its securities market.
It is rumoured Mrs Cha will earn an annual salary of between HK$5.5 million and HK$6 million in her CSRC post, a figure similar to her pay at the SFC.
This is much higher than those of other mainland civil servants. Premier Zhu is reported to earn an annual salary of about HK$29,452, which means that Mrs Cha could earn an annual salary 187 times higher than the premier.
Mrs Cha said at a press conference in Hong Kong last month that she would get a “reasonable payment" from the CSRC but declined to say how much she would earn.
Mrs Cha is the third senior executive from the SFC to join the CSRC. Two years ago, Anthony Neoh, former SFC chairman, joined the CSRC as its chief adviser at an annual salary of just HK$1, and last year former SFC deputy chairman Michael Wu Wai-chung also joined as an adviser at an annual pay of HK$4.5 million.
Both Neoh and Wu are working on contract basis and their appointments will expire in September and March this year respectively. This is different from the appointment of Mrs Cha who becomes a government official.
HKSAR passport holder
Born in Shanghai, Mrs Cha moved to Hong Kong at the age of two and became a Hong Kong citizen.
She later migrated to the United States, where she spent 15 years, working for San Francisco law firm Pillsbury Madison and Sutro before practising as an attorney in California and the US Federal Courts between 1983 and 1985.
In 1985, her husband Victor Cha Mou-zing was called back by his family to help HKR International, in which he is a director. Mrs Cha therefore returned to Hong Kong where she worked for law firm Coudert Brothers, helping US companies gain a foothold in the Chinese mainland market.
In 1991 she was recruited to the SFC as senior director of corporate finance, responsible for the mainland, listing policy, the regulation of mergers and acquisitions, investment products and the authorization of investment funds.
In 1994 she was promoted to be executive director (corporate finance) of the SFC and in 1998 became its deputy chairman.
Mrs Cha, 50, gave up her US passport late last year when she decided to take the job with the CSRC.
She had to renounce her US citizenship because a senior mainland civil servant with the rank of a vice-minister cannot be an overseas passport holder.
“I am an HKSAR passport holder," she announced at a press conference last month.
(SD News)
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