Sat, Dec 06, 2003 - Page 11 News List

Fubon slammed over paybacks

DODGING OBLIGATIONS The bank is using legal loopholes to avoid paying embezzlement victims what they are owed, a legislator claimed yesterday

By Amber Chung  /  STAFF REPORTER

Two units of the Fubon Financial Holding Co (富邦金控) are using legal tricks to avoid paying up to NT$158 million in compensation to victims of embezzlement, a lawmaker said yesterday.

Money was embezzled from depositors six years ago with the possible collusion of bank employees, People First Party Legislator Chin Hui-chu (秦慧珠) told a news conference yesterday at the legislature.

The bank, she said, should stand the loss.

"According to the final verdict by the Supreme Court [in September], Fubon bank should return to investors monies amounting to NT$158 million, embezzled from these victims' bank accounts with the possible complicity of bank employees," Chin said.

"However, Fubon Securities Co (富邦證券) and Fubon Bank, two affiliates of Fubon Financial Holding, are playing legal tricks to strengthen their negotiating position, which is unfair to those without their financial clout," she said.

In 1996, more than 100 people entrusted four representatives to invest in the stock market through accounts they opened at Fubon Bank and Fubon Securities.

Those stocks, worth NT$120 million, owned by these investors were sold in 1997 by Fubon's brokers without authorization and the proceeds were embezzled from the accounts.

After six years of hearings, the Supreme Court ruled in September that, because its professional negligence infringed depositors' rights and interests, Fubon Bank was liable for returning the money to investors.

While investors were expecting the compensation sometime following the verdict, Fubon Securities in October claimed they were also a victim of the embezzlement and demanded a provisional seizure of the proceeds, Chin said.

Subsequently, Fubon Bank approached the victims and demanded they accept only 60 percent of the money they were owed.

"They simply exploited legal procedures in a bid to bypass their responsibility," Chin said, adding that financial regulators should investigate the case and allow the investors to have their money back as soon as possible.

Authorities including the Securities and Futures Commission (證期會) yesterday said they would conduct an investigation of Fubon Securities and mete out punishment if necessary.

"We have punished the securities brokers by suspending their business for three months," the commission's chief secretary Wu Yui-chun (吳裕群) said at the press conference. "And we will investigate Fubon Securities for unauthorized stock sale and impose punishment based on the evidence we find."

Fubon Bank said they will pay the money after proceeds in question are released.

Fubon Securities said they would prepare relevant data and make clarification on this matter to the commission as demanded.

Fubon Securities' senior vice president Kenny Kuo (郭晃庭) said their move to seize the proceeds was to safeguard their stockholders' interests. "We haven't decided to bring a suit on this matter and will consult with our legal advisors for future solutions," Kuo said.

A legal expert in securities transaction law said Fubon Securities' actions were lawful but may not be ethical.

"The court must have approved the company's application for a reason," said Brian Hsieh (謝易宏), associate professor at Soochow Law School (東吳法學院). "Such legal actions does win the bank some time and negotiation power in this business."

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