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Ministry slated to back candidate against Chen

China Development Financial Holding Corp (中華開發金控) shares gained yesterday on a report that the Ministry of Finance may support Mega Financial Holding Co President Lin Tzong-yeong (林宗勇) in his bid to become chairman of the corporation at a shareholders' meeting on Monday.

The news came as a surprise to investors as the ministry has been cooperating with KGI Securities Co (中信證券) president Angelo Koo (辜仲瑩), who wants to wrest control of China Development from incumbent chairwoman Diana Chen (陳敏薰).

On the TAIEX, China Development rose 2.7 percent to close at NT$19.4, while KGI Securities rose 4.2 percent to NT$17.40.

KGI Securities, with a 6.2 percent stake, is the biggest private shareholder in China Development.

But Minister of Finance Lin Chuan (林全) yesterday denied speculation that Lin has been designated to compete for the chairmanship of China Development Financial.

"It's still uncertain whether the government is capable of taking up the chairmanship, depending on how many board seats we secure at next Monday's election," Lin Chuan told a press conference yesterday afternoon.

Lin reaffirmed that the government expects to win a maximum of eight seats, including one independent director, on China Development's reshuffled 21-member board of directors.

The minister yesterday repeatedly shrugged off questions asking whether the government was interested in nominating its own candidate to take up the company's top job, and said, "the government will do all it can to maximize the number of its board seats and hasn't ruled out any possibility."

Although Mega's Lin is not on the government's candidate list, Lin yesterday said that theoretically the government was entitled to replace board candidates after the election.

After teaming up with KGI, the ministry has been successful in launching a joint campaign in the past three weeks to solicit proxy votes. The government thereby has increased its stake on the board from 7 percent to over 15 percent.

KGI has secured over 45 percent of proxy votes while incumbent chairwoman Diana Chen only rallied approximately 15 percent of the vote, which is likely to cost her the chairmanship.
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