Wed, Dec 18, 2002 - Page 10 News List

China Steel chairman asked to retire

INGRATITUDE Despite working in the industry for over 40 years and leading the state-run company to another profitable year, officials say new blood is needed

By Kevin Chen  /  STAFF REPORTER, WITH BLOOMBERG

Minister of Economic Affairs Lin Yi-fu (林義夫) confirmed yesterday that Kuo Yen-tu (郭炎土), chairman of state-run China Steel Corp (中鋼) has been asked to retire.

Despite Kuo's resistance, Lin said he is determined to replace the senior official with new blood.

"We are considering a younger candidate to replace Kuo who is already 65 years old ... and I've personally phoned him about leaving," Lin said.

The ministry is China Steel's largest shareholder, with a 40.46 percent stake in the corporation.

But Kuo, who turned 65 Thursday, strongly rejected assertions that he is too old for the job.

"If that's the case, I can't accept it," Kuo said at a press conference yesterday afternoon following a China Steel board meeting. "If there's a successor to me, then I would say the successor is still Kuo Yen-tu and the best candidate is still Kuo Yen-tu."

Kuo said there should be no age limit for a political appointee like himself, who took the jobt on May 31, 2001, replacing Wang Chung-yu (王鍾渝).

Kuo has spent the past 43 years in the steel industry.

Several local Chinese-language newspapers yesterday speculated that Lin Wen-yuan (林文淵), former vice chairman of the Commission of National Corporations, or Regis Chen (陳朝威), former chairman of Chinese Petroleum Corp (中油), may replace Kuo.

Lin refuted the reports, saying the ministry is just starting the selection process.

Kuo's position fell into question on Monday after the Union of China Steel Corp (中鋼產業工會) requested Kuo step down because of his unwillingness to raise salaries at the company by 3.5 percent next year.

Union members expressed hope that the next chairman would not be a political favor.

"Politics should not become involved in the selection process," union head Wu Ching-pin (吳清賓) told TVBS yesterday.

The company agreed at a board meeting yesterday to a 2.5-percent increase in salary next year.

The government's ouster of Kuo, a move analysts attribute to party politics, caused the company's shares to fall as much as 4 percent during the morning session on the TAIEX, ending down NT$0.3, or 1.52 percent, to close at NT$19.5 per share.

Chinese-language media have speculated that the DPP is ousting Kuo because the company failed to mobilize its resources behind Mayor Frank Hsieh (謝長廷), who narrowly won re-election this month in Kaohsiung.

But Kuo defended himself as a "professional business manager, not a politician."

"I know nothing but steel," he said.

Expressing his hopes to stay on, Kuo said he had visited the Presidential Office last night to meet some "important people."

He didn't elaborate.

Kuo's removal may not be popular with investors.

"The government wants someone who listens to them more," said Michael Lan, an analyst at Sinopac Securities Corp (建華證券). "He is more of a businessman than a politician."

"We're never comfortable when a decision like this is made for political reasons," said Joseph Wang, who manages NT$2 billion in stocks at Polaris Investment Trust Co (寶來投信).

China Steel yesterday also reported a pretax profit of NT$17.4 billion in the first 11 months, about 94 percent of its full-year target, vice president Chen Yuan-cheng (陳源成) said.

The company expects net income to surge 83 percent next year to NT$29.18 billion on sales of NT$113.36 billion, because of rising prices and surging demand, Chen said. The company predicts earnings per share of NT$3.1 next year, up from NT$1.7 this year, he said.

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