Government steps into CDIC fray

China Development Financial Holding Corp (開發金控) chairwoman Diana Chen (陳敏薰) yesterday called the government's intention to step into the financial service company's upcoming board reshuffle "flawed."

"The government, KGI Securities (中信證券) and we [Lilontex Corp (理隆纖維)] own less than 30 percent [of China Development] ... Therefore I don't think it was appropriate for us to decide the board's future makeup" at last Sunday's meeting, Chen told reporters yesterday.

Chen may lose her position after the Ministry of Finance re-allocated board seats according to shareholdings during a meeting on Sunday, which was chaired by Finance Minister Lin Chuan (林全), who represents the government's 5.86 percent stake in the company.

Both Chen, whose Lilontex Corp owns less than 1 percent of the company, and Angelo Koo (辜仲瑩), whose KGI Securities owns a 6 percent stake, also took part in that meeting.

One decision was reached at the meeting.

According to Lin, all shareholders agreed to finalize the new 21-member board's makeup on Friday. In proportion to their stake, the government and KGI will each get eight seats on the board, while other shareholders including Lilontex, Yuen Foong Yu Group (永豐餘集團), Acer Inc and Inventec Corp (英業達) will each have one seat.

The remaining seat will be jointly recommended by all shareholders and coordinated by the Bank of Taiwan (台灣銀行).

The government and KGI, in addition, will each be granted one seat on the company's three-member supervisory board while the government is entitled to recommend the remaining company supervisor.

The Ministry of Finance ruled on Sunday that "one major shareholder group will be formed to take charge of future proxy solicitation" before the April 5 board election.

Seemingly upset by the government's attempt to oust her and Chinese-language media headlines yesterday that read "Chen is ousted," the chairwoman tried to call for an emergency board meeting before Friday to discuss the matter, but no date has been set, according to China Development.

Lin yesterday told lawmakers that the meeting was aimed at heading off management infighting.

"The ministry's move aims to maintain market order for fear that too many China Development shareholders would undertake proxy solicitation at the same time to intensify the fight over the company's future management," Lin said.

But legislators including the Democratic Progressive Party's Lin Wen-lang (林文郎), the People First Party's Norman Yin (殷乃平) and the Chinese Nationalist Party's (KMT) Lee Chia-chin (李嘉進) yesterday accused the government of manipulating China Development's future management and taking sides with Chinatrust Financial Holding Co, (中信金控) with which KGI is affiliated.

Lin, however, denied the accusation, saying it was natural for shareholders to decide the board's future makeup.

He also expressed disappointment with Chen's criticism of the government, saying that "she should have voiced her opinions on Sunday."

Koo, whose KGI seems to be the big winner from the government's actions, wasn't available for comment yesterday.