Formosa Workers Protest Shutdown
Employees of the Formosa Chemicals and Fiber Corp. (FCFC) staged several demonstrations during October, some of which became violent, to protest potential job losses due to the closure of the company’s plant in Changhua over environmental issues. Changhua County’s Bureau of Environmental Protection denied the extension of operating permits for the plant’s three coal-fired power generators in September on the grounds that they violated environmental safeguards against air pollution. Executives at the company, a subsidiary of the Formosa Plastics Group, denied the allegations, claiming that the power-and-steam cogeneration boilers are capable of passing the most stringent environmental inspections and that the county is trying to force the plant out to pave the way for commercial redevelopment. The company is seeking an injunction against the ruling in the Taichung District Court. Up to 2,000 workers, including downstream vendors, face job losses, and the company is said to be losing some NT$27 million for every day that the plant stands idle.
FSC Head Resigns, Successor Installed
Financial Supervisory Commission (FSC) Chairman Ding Kung-wha and Vice Chairman Kuei Hsien-nung resigned on October 3 in the aftermath of the Mega bank money laundering and XPEC stock-fixing scandals that have embroiled the nation’s financial sector (see accompanying stories). Ding was quoted as saying he had to resign “to protect my integrity” and “to prevent further misgivings about the commission.” According to rules governing political appointees, Kuei, who was appointed alongside Ding, was likewise forced to resign.
Bank of Kaohsiung Chairman Lee Ruey-tsang was tapped to replace Ding on October 18. Lee had served as deputy finance minister during the Chen Shui-bian administration under Lin Chuan, then Finance Minister and now Premier. Lee later headed Kaohsiung City’s Finance Bureau before being promoted to secretary-general of the city government by Kaohsiung Mayor Chen Chu, and then being named to chair the Bank of Kaohsiung.
Two Former MEGA Officers Indicted
Two former top executives at beleaguered Mega Financial Holding Co., McKinney Tsai and Wang Chi-pang, were detained by the Taipei District Prosecutors’ Office on October 4 on suspicion of breaching the Securities and Exchange Act and Banking Act. Tsai is the former chairman of Mega Financial and its flagship Mega International Commercial Bank, and Wang was his top aide. Both men resigned from Mega last March in the wake of a money laundering scandal detected by the New York State Department of Financial Services, which subsequently levied a US$180 million fine on Mega. The two then joined Chien Chi Asset Management, controlled by Ruentex Financial Group’s Samuel Yin. Prosecutors claim that shortly after the two joined Chien Chi, the financial firm’s assets leaped from NT$8 billion to NT$20 billion, mostly due to questionable loans obtained from Mega. The detentions followed the questioning of 18 people, including Tsai, Wang, and Yin.
XPEC Stock-Rigging Scandal Widens
The XPEC Entertainment Inc. stock-price rigging case has grown to include a Chinese mastermind and career financial criminal among the alleged culprits, according to prosecutors. Chinese gaming industry tycoon Wang Ji, CEO of the Zhejiang Century Huatong Group Co. and founder of Shanghai T2 Entertainment, has been implicated as the ringleader behind the scheme to inflate the stock price of XPEC, while Yang Jui-jen, a convicted financial criminal dubbed the “10 Billion Dollar Bandit,” was said to be recruited to implement it. Last May, a Japanese gaming company announced that it would acquire a 25% stake in XPEC, driving up speculation in the company. Prosecutors assert that Wang, Yang, XPEC chairman Aaron Hsu, and others conspired to hype the acquisition, which eventually fell through, resulting in up to 30,000 investors losing money.
Koo And Others Face Embezzlement Charges
Jeffrey Koo Jr. and other executives of the CTBC Financial Holding Co. were indicted by the Special Investigation Division of the Supreme Prosecutors’ Office on October 5 on charges of embezzlement and other financial crimes that reached into the upper echelons of Taiwan’s major conglomerates and their subsidiaries.
The indictments culminate a nearly five-month-long investigation by the prosecutors’ office, which also implicated the founder of CTBC, Jeffrey Koo Sr., who passed away in 2012.
Among other charges, the younger Koo has been charged with three counts of embezzling a total of US$300 million from CTBC Financial from 2004 to 2007 and transferring the funds to accounts controlled by Koo and his father. Seven others were also indicted, including CTBC Financial’s chief financial officer Perry Chang; CTBC executives Wu Feng-fu, Chang Yu-chen, Chang Su-chu, and Steven Chen; as well as Gobo Group president Chu Guo-rong and his assistant Lin Kui-hsin. The eight have been charged with violations of the Securities and Exchange Act, the Money Laundering Control Act, and the Insurance Act.