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CHAIRMAN'S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL

REFERENCE

In light of its size, Chargeurs has not applied the recommendations of the
Afep-Medef corporate governance code of December 2008. The Group's corporate
governance and internal control practices and procedures are based on the
general principles of internal control defined by the French securities
regulator (Autorité des Marchés Financiers) in its February 25, 2008 document
entitled "Cadre de référence du contrôle interne: Guide de mise en oeuvre
pour les valeurs moyennes et petites", which provides internal control reference
guidelines for small- and mid-cap companies.

BOARD OF DIRECTORS

Members
The membership of the Board of Directors is presented in the Corporate
Governance section of the Annual Report, page 58.

Organization of the work of the Board of Directors
The Board of Directors, comprising the Chairman and four Directors, meets four
times a year: twice to examine the interim and annual financial statements, once
to review Group strategy in relation to the budget and the business plan, and
once after the Annual General Meeting to implement the decisions voted by
shareholders. At each meeting, the directors also discuss the Group's business
performance, major projects and the matters submitted to the Board for a
decision. The work of the Board is supported by that of the Finance Committee,
which meets once a month.
Compensation paid to the Chairman and Chief Executive Officer by Group companies
is set by the Board of Directors. His incentive bonus is tied to Group results
and represents a percentage of his base salary. In light of 2008 results, no
bonus will be paid in 2009.

INTERNAL CONTROL

Definition
Internal control is a system that the Company defines and implements under my
own responsibility to provide assurance concerning:
- Compliance with laws and regulations.
- Implementation of the instructions and guidelines set by senior management or
the Board of Directors.
- Efficient operation of the company's internal processes, particularly those
contributing to the protection of its assets.
- Reliability of financial reporting.
More generally, it contributes to the control of the company's business, the
effectiveness of its operations and the efficient use of its resources. By
helping to anticipate and control risks that could prevent the company from
meeting its objectives, internal control plays a key role in managing and
overseeing its various business operations.

Components of the internal control system

An efficient organization
The Group is organized around a lean holding company structure, core businesses
each with their own small holding company team, and a large number of operating
subsidiaries. Empowering the operating companies is a fundamental principle at
Chargeurs and one that is made possible by efficient information systems that
provide the holding company with high quality financial information and the
means to swiftly identify risks. In recent years, the rollout of the "Dolly"
model has placed risk identification and management at center stage.
The Dolly model is based on obtaining accurate information about risks so that
they can be actively managed. For the Dolly financial structures to operate
effectively, it is essential to analyze and eliminate a large number of risks.
The transactions, put together with risk management professionals such as
insurers, banks and investors, automatically bring with them the controls that
are a standard feature of securitizations. Chargeurs is engaged in several very
different businesses and has operations around the world. To take into account
this diversity and the specificities of the Dolly model, we have implemented
organizational measures designed to manage the risks that are likely to have a
material adverse effect on our earnings, assets and commitments. The
cornerstones of the system are:
- Empowerment and accountability: the Chairmen and Managing Directors of the
subsidiaries have full responsibility for managing their units.
- Short lines of communication.
- Regular reporting on strategic issues.
- Group insurance programs covering all insurable risks.
- An Insurance Risk Management Committee, with the participation of the Risk
Managers of the core businesses.
- Group-wide Intranet access to operational procedures and rules.

A system to map and analyze the main identifiable risks
Every month, the Executive Committee pinpoints mission-critical issues and
appoints the most appropriate manager for each one, regardless of his/her
position relative to other managers. A specific reporting system is in place so
that I am informed directly, at regular intervals, of the status of these
managers' work. The quality of their status reports is one of the areas covered
during their annual performance review. The issues dealt with generally concern
events that could have a material adverse effect on our financial results and
our Group's various risk exposures. An outside consulting firm, specialized in
economic forecasting, is used to help evaluate macroeconomic risks specific to
each of our host coun tries. The consultants periodically present their findings
to the Executive Committee and model certain specific risks when requested by
one of our businesses.
Chargeurs occasionally retains the services of specialized firms to either
perform key analyses or temporarily support its operational teams when critical
projects are being implemented. This organization places the Executive Committee
at the center of the risk management process.

An information system focused on accountability
Chargeurs' information system is based on the monthly income statements and key
balance sheet indicators reported by each of our W5 consolidated companies. We
have long been committed to producing high quality financial information. Back
in 1980, we were one of the first companies in France to set up a monthly
management reporting system based on the same accounting standards used to 
produce the statutory consolidated financial statements. Over the years,
this process has been improved and, since 2000, management and statutory 
reporting data are managed by the same information system. With the generation
of the consolidated accounts now simply the last phase in the process, this 
ensures constant control over the production of financial information. Each 
subsidiary's Managing Director and Finance Director send me com ments on their
monthly results, presented in a standard format. I review these results, 
together with the updated annual forecasts reflecting the impact of any new 
developments, during monthly meetings with the Managing Directors of the core
businesses.

Control procedures sized to address the challenges of each process

Accounting and financial risks
Since 2003, the main management processes have been analyzed in order to
document and map financial statement risks, the related poten tial financial
impact and the internal controls in place to contain them. As part of this
exercise, each core business has identified the three or four most sensitive
processes and reviewed the highest risk transactions within each one. The
procedures in place to manage and control these transactions have also been
identified.
These analyses serve to prioritize future measures, representing the starting
point for the Group's drive to strengthen control over its processes.

Operational risks
Steps taken in 2007 to strengthen the value of Chargeurs' assets were pursued in
2008, with the most significant operations for each core business being as
follows:
- Chargeurs Protective Films: introduction of a costing system that takes into
account feedstock price volatility.
- Chargeurs Interlining: acquisition of Etacol in Bangladesh to continue
expanding the business in Asia.
- Chargeurs Wool: sale of combing operations in Australia and of the investment
in combing operations in South Africa.

Constant oversight of internal control procedures

Supervising internal control
The subsidiaries' Finance Directors are responsible for controlling the
accounting and reporting processes. Secondtier controls are performed by the
Finance Directors of the core businesses as part of their oversight role with
regard to the subsidiaries.

Internal audit
Chargeurs does not have its own internal audit department and therefore
generally relies on local specialized firms in each region. An internal control
selfassessment process was initiated in the second half of 2007, which consisted
of sending all subsidiaries - except for holding companies - a copy of the
guidelines published by the Autorité des Marchés Financiers relating to
subsidiaries' compliance with internal control procedures. The following areas
were covered:
- Financial reporting and the preparation of financial statements. 
- Capital expenditure and divestments.
- Property, plant and equipment and intangible assets.
- Noncurrent financial assets.
- Purchases and trade payables.
- Production costs, inventories and work-in-progress.
- Revenue from external operations and trade receivables.
- Cash and cash equivalents.
Each subsidiary's Managing Director and Financial Controller duly completed the
related questionnaires, which were signed by the subsidiary's
Managing Director before being sent to head office. The information contained in
these questionnaires was subsequently summarized in a business-specific data
sheet, enabling us to identify any internal control weaknesses by business,
procedure and company, and to implement any requisite corrective measures.

Specific initiatives in 2008
The specific internal control initiatives carried out by each of the Group's
businesses in 2008 were limited to the following, due to the extent of
operational challenges:
- Chargeurs Protective Films: information systems security audit.
- Chargeurs Interlining: audit of inventories and receivables processes at one
of the subsidiaries, performed by an independent firm.
- Chargeurs Wool: implementation of systems to manage financial flows on a
consolidated basis.

External audit
Two audit firms share the task of auditing our consolidated financial
statements. All of the local Auditors' observations arising from their audits of
our subsidiaries' accounts are reported to the subsidiaries' senior management.
The Group Auditors produce a summary of these observations, which is presented
to me during twice-yearly meetings. The Group Finance Department is responsible
for ensuring that the Auditors' recommendations involving organizational changes
or changes to procedures are implemented without delay. The representa tion
letters issued by the subsidiaries' Managing Directors to the Auditors are
centralized by Chargeurs, to emphasize each Managing Director's accountability
for information related to his or her subsidiary included in the Group financial
statements.

The internal control situation at the end of 2008
I believe that internal control procedures related to the processing and
preparation of accounting and financial information at the end of 2008 were
appropriate considering the Group's characteristics. As these characteristics
make in-depth testing of our processes very costly, few such tests are currently
performed. Further investments will be committed in coming years in this area.
The 2009 action plan is based on the following strategic priorities:
- Finalizing reorganization of the management and statutory reporting process
with a view to upgrading our information systems.
- Launching a variety of specific initiatives that will be defined during the
first half of the year.
- Setting up an audit committee.
- Establishing general financial risk reviews within each business.

SHAREHOLDER PARTICIPATION IN GENERAL MEETINGS

The article 19 of the bylaws, relative to attendance and representation at
General Meetings, provides that:
- Shareholders may appoint their spouse or another shareholder as their proxy,
in accordance with the law.
- Minors and incapacitated persons may be represented by their legal guardian or
conservator, and companies and other legal entities may be represented by a
person with the power of attorney or other authority, in accordance with the
law.
- Spouses, guardians, conservators and other representatives are not required to
be shareholders of Chargeurs.
- In order to take part in a General Meeting, shareholders must be able to
provide evidence that their shares are recorded in a securities account, or
deposit the shares or present a certificate attesting that the shares have been
deposited, at least five days prior to the Meeting, in compliance with the
instructions provided in the notice of Meeting.
- For any given Meeting, the Board of Directors may, at its discretion, advance
the above-mentioned deadline or waive the requirement to deposit the shares.
- The Board may decide to issue admission cards to eligible persons in their
name and for their use only.
- Shareholders can vote by filling out and returning to the company a postal or
proxy form, in accordance with the applicable regulations.
- Prior to each Meeting, the Board may decide that shareholders who take pail in
the Meeting via video conference or any other telecommunication means that
allows them to be identified and whose nature and conditions of use are
determined by a decree of the Conseil d'État are deemed ed present and included
for quorum and majority purposes.

ITEMS LIKELY TO HAVE AN IMPACT IN THE EVENT OF A PUBLIC TENDER OFFER

None of the items mentioned in article L. 225.100-3- of the French Commercial
Code is likely to have an impact in the event of a public tender offer, except
for the following:
- The company's capital structure, as described in the Report of the Board of
Directors presented at the Annual General Meeting and published on Chargeurs'
website.
- Direct or indirect investments in the company's shares of which Chargeurs is
notified pursuant to articles L. 233-7 and L. 233-12 of the French Commercial
Code, and which are discussed in the Report of the Board of Directors presented
at the Annual General Meeting and published on Chargeurs' website.
- The rules governing the election or replacement of Board members and changes
to the company's bylaws, referred to in article 9, 10 and 12 of the bylaws.
- The powers of the members of the Board of Directors, defined in article 14 of
the bylaws.

Eduardo Malone,
Chairman and Chief Executive Officer
March 2009
                      
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