Financial expert could be appointed Taisugar chairman

The Ministry of Economic Affairs is considering appointing Kong Jaw-sheng (龔照勝), currently a board member of Taiwan Stock Exchange Corp (證券交易所), as the new chairman of the state-run Taiwan Sugar Corp (Taisugar, 台糖).

At a question-and-answer session at the Legislative Yuan yesterday, Minister of Economic Affairs Lin Yi-fu (林義夫) told lawmakers that he is planning to appoint Kong to replace Wu Nai-jen (吳乃仁) as the new Taisugar chairman.

Wu announced earlier this month his resignation from the state-run company to join the Democratic Progressive Party's presidential campaign team.

Lin praised Kong, former managing director and Taiwan country manager for Credit Suisse First Boston, as a seasoned banker specializing in financial planning and consulting.

He said he expects the appointment of Kong will help improve Taisugar's business losses.

Taisugar, 97 percent owned by the government, is expected to pay a NT$20.5 billion in cash dividends to its shareholders in July next year, which will reduce the company's large net cash position and weaken its financial flexibility, according to Taiwan Ratings Corp (中華信評), the local subsidiary of Standard & Poor's.

As of Oct. 31, Taisugar had cash on hand of NT$60 billion, versus total debt of NT$15 billion.

Taiwan Ratings said Wu's resignation would delay Taisugar's plan to streamline its organizational structure, as the company's major businesses were suffering losses as a result of high personnel costs.

Taisugar often needs to rely on land disposals to support its profit.

Just a week before his resignation, Wu had said the state-run company will downsize its personnel by 45 percent, or 2,500 staff, by next month.

The move, which aims to alleviate the company's financial difficulties, could save Taisugar an estimated NT$3.7 billion annually, he said.

The appointment of Kong is expected to be approved by a company board meeting slated to be held today, according to the ministry.

Kong is not new to Chen Shui-bian's (陳水扁) administration. He currently also serves as a board director at Taiwan Tobacco and Liquor Corp (台灣菸酒公司) and is a board member of Taiwan Thinktank (台灣智庫), a private research institute established in late 2001 by close aides to Chen and heavyweights from academic and industry circles.

In early 2001 Kong had helped the government organize investment forums in Europe and Hong Kong in which then-Minister of Finance Yen Ching-chang (顏慶章) took part.

In May 2001, he also escorted Yen to Washington for a US-ROC Business Council (美中經濟協會) meeting.

Probably because of his close relationship with the Chen administration, as some observers said, Beijing had barred the Zurich-based Credit Suisse Group AG from participating in deals in China that year.

That decision had caused several other banks to drop similar arranged trips later.