Diana Chen's foes name names

The dramatic infighting at China Development Financial Holding Corp (中華開發金控) continued yesterday as proxy letters ands lists of board-member recommendations from factions of shareholders aligned against company chairwoman Diana Chen (陳敏薰) were delivered to the Securities and Futures Institute late yesterday afternoon.

China Development, Taiwan's fourth-largest financial holding company, is scheduled to hold a shareholders' meeting on April 5 to elect a new board.

A faction led by KGI Securities Co (中信證券), with a 6-percent stake the biggest shareholder in China Development, is expected to control over 80 percent of the company's shares at the shareholders' meeting. KGI has support from the government and from private shareholders including Yuen Foong Yu Group (永豐餘集團), Acer Inc, Inventec Corp (英業達), Nice Enterprise (耐斯企業) and others.

The Ministry of Finance has been negotiating with KGI on a plan for allocation of board seats. The government has been represented in these negotiations by the state-owned Bank of China (台灣銀行) and International Commercial Bank of China (中國商銀). Having reached an agreement, KGI and the two state-owned banks submitted a list of 21 board candidates to the nation's securities regulator yesterday.

The government, which owns a 5.86-percent stake in China Development, nominated 10 board candidates including Lee Sheng-yann (李勝彥), president of the Bank of Taiwan, and Mckinney Tsai (蔡友才), general manager of International Commercial Bank.

KGI recommended eight individuals including KGI president Angelo Koo (辜仲瑩) and Grand Pacific Petrochemical Corp chairman (國喬石化) Daniel Wu (吳春台).

The right to choose the voting bloc's remaining three seats will go to Acer Inc, Yuen Foong Yu Group (永豐餘集團) and Yeh Kuo-yi (葉國一) of the Inventec Corp (英業達).

To the market's surprise, Benny Hu (胡定吾), chairman of China Development Industrial Bank (開發工銀), a subsidiary of China Development Financial, did not appear on the government and KGI's recommendation list.

Hu, the top member of Chen's management team, has chosen to side with the government and KGI on the issue of the board reshuffle.

China Development Financial did not make public its list of candidates for the board.

"The list will not be announced by March 5," company spokeswoman Debbie Tung (董孝穎) said.

On Wednesday, Chen pulled out of a government-proposed deal aimed at resolving the row over the board election. She said that the government, KGI and her Lilontex Corp (理隆纖維) together own less than 30 percent of China Development's shares and have no right to decide the board's future makeup. She said she would not participate in a group effort to collect letters of proxy from shareholders.

Though Chen is still striving to obtain support from smaller shareholders including Rock Hsu (許勝雄), chairman of Compal Electronics Inc (仁寶電腦), the nation's second-largest maker of notebook computers, her chances of remaining the company's chairwoman look slim, as Chen's Lilontex owns a less than a 1-percent stake in China Development.

The uproar over the governance of China Development emerged after the ministry held a meeting Sunday to intervene in the company's upcoming board vote. As a result of the meeting, Chen is expected to lose her position.