Mon, Jul 28, 2003 - Page 11 News List

Deadbeats take taxpayers cash and give it to China

MASSIVE DEBTS Why are Taiwanese businessmen allowed to continue ignoring their debts to state-run banks while investing heavily in ventures in China?


Former Tuntex Group president Chen Yu-hao and his wife Lin Fu-mei.


The following heated exhange took place in the legislature's finance committee one year ago:

PFP Legislator Chen Chih-bin (陳志彬): Why was the Tuntex Group (東帝士集團) able to invest more than NT$13 billion in China while it was seeking a bailout from [Taiwan's] Ministry of Finance banks?

Lee Yung-san (李庸三, former finance minister): In my understanding, the Xianglu Group (翔鷺集團, Tuntex's conglomerate in China) was set up by way of technology transfer. He [former Tuntex Group president Chen Yu-hao (陳由豪)] even brought back US$10 million [to Taiwan] to build a factory [in China].

Chen: But everyone knows that [Tuntex's] Chen invested in the company.

Lee: He merely built the factory for China and transferred technology. According to an investigation by the Mainland Affairs Council (陸委會), he has no property registered under his name in China ... He's still doing business in Taiwan.

This exchange was brought on by the question of whether Chen had left his debts behind in Taiwan. After crossing swords with law-makers, Lee said something that no one found acceptable: "Chen's assets are still in Taiwan."

All of a sudden, ordinary people have finally realized why these "magnates" running into debt have all tried to avoid clearing their bank loans.

It is because the financial institutions haven't got a clue about the ability of these debt-evading tycoons to move their capital. What is even more deplorable is that government officials even speak on behalf of these shirkers.

When Lee said, "Chen's still running a business in Taiwan," it grated on those who know Chen in person or who used to work for him.

Apart from Chen, Hone Shee Group (鴻禧集團) chairman Chang Hsiu-cheng (張秀政), Cathay Trust Group (國泰信託集團) chairman Tsay Chern-nan (蔡辰男) and former Chung Shing Commercial Bank (中興銀行) chairman Wang Yu-yun (王玉雲) are all famous for their booming businesses in China.

Wang owns a five-star hotel in Hangzhou. He left behind NT$88.5 billion in bad debts at Chung Shing Bank. Chen, Chang and Tsay and their affiliated businesses borrowed a total of more than NT$300 billion from local banks.

Despite the massive debts they left behind in Taiwan, these tycoons have shown their prowess across the Taiwan Strait. Chen set up his Xianglu Group in Xiamen. Chang and often invites influential Chinese officials to play golf at his Hone Shee golf course in Beijing. Tsay, hailed as "the King of Dalian," has seen the value of his shopping mall in Dalian City, northeast China, quadruple.

Core Pacific Group chairman Shen Ching-ching (沈慶京) also planned to build a world-class wonderland theme park in Hangzhou. But the plan was canceled less than a year later. He still holds the dream of becoming China's shopping mall king one day.

Let's have a closer look at the bad debts these entrepreneurs have left behind at Taiwan's financial institutions. Chen and Chang each owe nearly NT$100 billion. Tsay owes more than NT$10 billion yet he is still influential in both Taiwan and China. Faced with massive bad debts at local banks, even the finance ministry can do nothing about it.

Insufficient collateral is the banks' problem. This is an idea shared by all the tycoons who have left their debts in Taiwan. The debts left behind by Chang, Chen, Tsay, their affiliated businesses, friends and relatives are seriously short on collateral.

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