Legislator slams co-op takeovers

Independent legislator Tsai Hao (蔡豪) criticized the government yesterday for what he said was a failure to follow the Farmers' Association Law when it took over a number of credit departments belonging to such associations.

Tsai said at a news conference that the law dictates that any handling of financial property at a farmers' association must first receive the approval of an assembly of that association's delegates.

However, taking the case of a farmers' association in his constituency as an example, Tsai said that the delegates of that association did not vote to consent to allow the government to take over the management of its credit department, yet the Ministry of Finance stepped in, using Article 13 of the Financial Merger Law to relieve the association's various boards and officers of their duties and powers over the credit department.

According to Article 13, if the financial situation of the credit department of a farmers' association or a fishermen's association deteriorates, making it unable to pay off its debts or leaving it with negative net assets, then the Council of Agriculture is empowered to relieve the association's boards and officers of their duties and powers over the credit cooperative, and the Ministry of Finance can appoint a bank to take over.

Tsai said that he will raise the issue at the new legislative session slated to open today.

The credit departments of 12 farmers' associations and one fishermen's association in Pingtung County were taken over by government-appointed banks last week after evaluations confirmed that their net assets were negative.

A total of 36 such credit departments islandwide were taken over by 10 domestic commercial banks to much resistance from farmers and the poorly performing financial institutions.

The Legislative Yuan ratified a statute at an extraordinary session on June 27 for the establishment and management of a NT$140 billion (US$4 billion) Financial Reconstruction Fund, giving the government legal funding to tackle existing problems and clean up bad loans at the institutions, which are mostly located in rural or coastal areas of central and southern Taiwan.

The takeover work is the first step taken by the Financial Reconstruction Fund under the Executive Yuan to help consolidate the operations of local banks, credit departments run by farmers' associations, and fishermen's credit cooperatives.