China Development chair may be ousted

China Development Financial Holding Corp (開發金控) chairwoman Diana Chen's (陳敏薰) position may be challenged by one of the company's largest shareholders, KGI Securities (中信證券), which owns more than 10 percent of the company, market watchers said yesterday.

"KGI has aggressively acquired over 10 percent of China Development's shares, which will allow it to flex its muscle in the financial-service company's upcoming board of directors vote," said William Fong (方偉昌), an analyst at Primasia Securities Co.

China Development, the nation's fifth-largest financial services company by market value, is scheduled to hold a shareholders' meeting on April 5 to elect a new board.

Fong gave a less-than-stellar review of China Development's performance under the leadership of Chen, despite the media-savvy chairwoman's high profile with the public.

He said that there is room for the company to improve its financial and business transparency as well as its profitability, issues about which foreign investors have long expressed reservations.

Fong made the remarks after Chen was reported by a Chinese-language newspaper yesterday to have asked shareholders to give her their proxy votes in April.

The report said that Chen and other major shareholders have formed an alliance in a battle with KGI for board control.

KGI, chaired by Angelo Koo (辜仲瑩) -- the second son of Jeffrey Koo (辜濂松), chairman of Chinatrust Financial Holding Co (中信金控) -- has expressed interest in controlling seats on China Development's 21-member board, but has not yet explicitly said that he wants to engineer any changes in the chairmanship.

KGI's 10-percent stake provides Chinatrust Financial influence over China Development's future management and also allows a way, if more shares are acquired, for Chinatrust to explore the possibility of striking a merger deal with China Development, whose core business in industrial banking could expand Chinatrust's financial scope.

Chen's 0.11 percent stake in China Development gives her few options for keeping her seat if major shareholders do not support her.

Local Chinese-language media speculated yesterday that Chen had persuaded Ho Show-chung (何壽川), who is chairman of both the Yuen Foong Yu Group (永豐餘集團) and the International Bank of Taipei (IBT, 台北商銀), as well as another unidentified high-tech tycoon, to support her re-election bid.

The media reports said that Chen has firmed up support from shareholders representing 8 percent of the company's ownership, a position that would enable her to seek more authorization letters from individual shareholders with voting rights in the April election.

"Individual shareholders, whose influence can't be ignored, will be our major source of support," Chen said last month.

But Yuen Foong Yu Group yesterday denied outright the media's speculation.

"The chairman ... is shocked to hear the groundless speculation," a Yuen Foong Yu official, who declined to be identified, told the Taipei Times after speaking to Ho in person.

The official said that, contrary to what the media had reported, Ho owns less than a 5-percent stake in China Development and hasn't made a decision to support either Chen or Chinatrust because neither management team has presented a convincing blueprint for the company's future.

China Development spokeswoman Grace Fang (方鳳山) declined to comment on the news yesterday.