Koo clan splits up family businesses into two big groups

After two years of preparation, the Koo's family-run business finally split into two major groups, one headed by 86-year-old Koo Chen-fu (辜振甫), chairman of the Koo's Group (和信集團) and the other by his 69-year-old nephew Jeffrey Koo (辜濂松), chairman and CEO of Chinatrust Financial Holding Co (中信銀金控).

"The split-up aims to consolidate professional management in the [financial] business," Chinatrust president Jeffrey Koo Jr. (辜仲諒) -- the fourth generation of Koo leaders -- told reporters on Thursday.

New blood relatives who do not bear the surname of Koo should be allowed to take up management responsibilities based on their business expertise while the Koo family continues to serve as financers, 38-year-old Jeffrey Koo Jr. added.

Chinatrust yesterday confirmed that Jeffrey Koo relinquished his seat at the board of Taiwan Polypropylene Co (福聚公司) to the Koo's Group on Thursday, facilitating the split-up agreement reached two years ago by both clans.

Core businesses of the Koo's Group now include Taiwan Cement Corp (台泥), China Synthetic Rubber Corp (中橡) and KG Telecommunications Co (和信電訊). Jeffrey Koo consolidated his grip on the banking business to expand Chinatrust, and also took over China Life Insurance Co (中國人壽) and Videoland Inc (緯來企業) -- a local sports television station -- both of which were formerly owned by the Koo's Group.

Younger generations of both clans in the Koo family are also gradually taking over the helm including Jeffrey Koo Jr, who is the eldest son of Jeffrey Koo. He currently chairs the Chinatrust Commercial Bank (中信銀). Forty-eight-year-old Leslie Koo (辜成允), who is Koo Chen-fu's second son, currently heads China Synthetic Rubber.

Market watchers yesterday lauded the Koo family's progressive and clear-cut approach to differentiate their core businesses as well as to improve financial transparency.

Hsieh Chin-ho (謝金河), a financial expert, said the Koo family's split-up had nothing to do with a family feud. Instead, it is based on the business practice of "minding your own business."

He added that the family appears to have retained a good working relationship among its members, although Jeffrey Koo's business outperformed Koo Chen-fu's ill-performing China Life Insurance in December 2001.

Koo Chen-fu may face a challenge ahead in cleaning up the mess left behind by his deceased eldest son, Chester Koo (辜啟允) -- who died of gall-bladder cancer at the age of 48 in 2001 -- at Taiwan Cement, which has a liability of NT$50 billion, Hsieh said.

But Mike Chow (周道中), a manager with Yuanta Core Pacific Securities Corp (元大), yesterday said that Taiwan Cement is doing well, since it has few rival competitors at home and its China-based investments may soon turn a profit.

Taiwan Cement president Leslie Koo announced in April that the company plans to invest US$2 billion in its China-based plants over the next five years, aiming to become the largest cement maker in China by 2008.

William Fong (方偉昌), an analyst at Primasia Securities Co, also said that the breakup of the family's business is sure to benefit Chinatrust's future performance by enhancing its financial transparency.

"The move will help dismiss market concerns that a family-run business usually involves complicated hidden debts that are not easy to detect and fear that the burden will be put on the banking business," Fong said.

Fong added that Chinatrust has been toning down its family-run nature by recruiting professionals such as Eric Chen (陳聖德), formerly country officer of Citigroup Taiwan, and his 19 top staff.