Chinatrust raided in takeover scandal
Has there been any scuttlebut as to why this is happening? Is it a straightforward anti-corruption investigation, or are there political motivations attached?
I was rather surprised to hear about this, especially the fact that Jeffrey Koo, Jr.–crown prince of the family–is directly implicated in the investigation.
[quote]Prosecutors and investigators yesterday raided the headquarters of the Chinatrust Financial Holding and residences or offices of ranking officials in a bid to seize all possible evidence documents or accounting books in connection with the firm’s bid to take over Mega Financial Holding.
Chinatrust’s deputy chief finance officer Lin Hsiang-hsi and chief law officer Teng Yien-tun were also taken to the investigation bureau for interrogation. Core investigators said that the raids were launched in advance mainly because the planned departure of the firm’s former chief finance officer Chang Ming-tien for Japan undermined their original investigation deployment.
Now that Chang has been held incommunicado, prosecutors and investigators decided to step up their investigation into the scandal by raiding the headquarters of Chinatrust and residences and offices of some relevant ranking officials of the firm. The Taipei District Prosecutors’ Office listed Jeffrey Koo Jr., former vice chairman of Chinatrust Financial Holding and chairman of Chinatrust Commercial Bank, as a defendant in the case involving Chinatrust’s bid to take over Mega Financial Holding. Koo is visiting the U.S. at the invitation of the Eisenhower Fellowship and is likely to be detained immediately after returning to Taiwan.
Prosecutors in charge believe that Koo may have committed breach of trust in the criminal code, as well as offenses stipulated in the Banking Law and the Financial Holding Law, which are liable to over seven years of imprisonment and under NT$500 million of fine, should income from criminal acts exceed NT$100 million. That means if convicted, Koo will be put behind bars.
In addition to Koo, three others have also been listed as defendants for the merger scandal so far, including Chang Min-tien, Lin Hsiang-hsi, and Teng Yien-tun. There has no evidence yet implicating Koo’s father, Jeffrey L.S. Koo, chairman of Chinatrust Financial Holding, but the prosecutors in charge didn’t rule out putting others on the list of defendants along with progress of the investigation.
In response, the senior Koo, who just returned to Taiwan from Japan yesterday, said that he believed that the judicial system would financial prove the innocence of his son as Chinatrust has long adhered to the principle of integrity and righteousness in business operations.
Koo said that he and his company officials will be very cooperative in any probes and interrogations by investigators and prosecutors concerning the case.
He continued that the case wouldn’t undermine the firm’s plan to introduce capital funds from foreign investors and install independent directors.
Meanwhile, when asked by reporters whether Chinatrust was suffering political oppression from the government, Koo said “You news media should know the best.”
Quite a few major foreign institutional investors have stood behind Chinatrust by over-buying the firm’s shares in the recent trading sessions of the local bourse.
The prosecutors are investigating the case in the direction of breach of trust, as well as offenses in the Banking Law and Financial Holding Law. The case may also involve insider trading, in view of the NT$1 billion of profits garnered by an offshore paper company from trading structured notes with Chinatrust.
The Taipei District Prosecutors’ Office initiated the investigation upon receiving an accusation of illegal practices in the merger case from the labor union of Mega Financial Holding. Upon the request of the office, the financial crime supervisory panel of the Taiwan High Court Prosecutors’ Office made an analytical report, whose contents are unfavorable to Koo and other defendants.
During the interrogation by prosecutors, Chang Min-tien denied ranking executives of Chinatrust pocketed profits from the case, saying that in view of the tremendous business scale of Chinatrust, it’s impossible for them to take the risky move for mere NT$1 billion.
Chang alleged that though set up by a former staffer of Chinatrust, the offshore paper firm, Red Fire Development, has no financial connection with Chinatrust and the trading of structured notes didn’t jeopardize the interests of neither Chinatrust nor its shareholders. [/quote]