Wed, Jul 28, 2004 - Page 11 News List

Creditor banks consider Central Leasing meeting

FRAUD?A dodgy and complicated series of transactions has left 130 companies wishing that banks would get off their backs. Perhaps relief is in the offing next month

By Amber Chung  /  STAFF REPORTER

Banking authorities said yesterday that creditor banks might convene a meeting next month to deal with alleged loan fraud by financially troubled Central Leasing Corp (中央租賃), a company that leases equipment and real estate.

Central, established in 1975, is the nation's oldest leasing company -- and also a lender. The Taipei-based firm is alleged to have borrowed NT$3.1 billion from 32 banks last year and earlier this year, using as collateral lending agreements it had signed with 130 companies without those companies' knowledge. The companies say that they never received the money they agreed to borrow from Central -- and that the banks that lent money to Central have been attempting to recover their money from them.

"This fraud case has affected these 130 companies and caused three out of their 2,000 downstream suppliers to go bankrupt," said Jeff Juang (莊盛晃), spokesman for a group of these companies.

Yesterday the group met Gary Tseng (曾國烈), director general of the Monetary Affairs Bureau, and petitioned the regulatory agency for assistance in negotiations with the creditor banks.

The group hopes that the banks will stop attempting to retrieve money from the companies that were victims of the alleged fraud, and not liquidate nor seize their property and products to be delivered to clients, Juang said.

"This is a case involving complicated credit and lending relations among Central Leasing, the 130 companies and creditor banks," Tseng said at the press conference yesterday.

Tseng said the creditor banks should clarify the relationships between Central Leasing and the companies, and said he would ask government agencies such as the Ministry of Economic Affairs and the Central Bank of China to step in to help the affected companies.

Juang accused some of creditor banks, like the International Commercial Bank of China (中國國際商銀), of collusion with Central Leasing in the fraud. Central Leasing is 20 percent owned by the bank.

Even so, the group hopes to reach preliminary agreements with creditor banks on measures to handle the problem during a meeting to be held on Aug. 2, Juang said.

Central Leasing's financial problems started and deteriorated after debtor companies, including U-Land Airlines (瑞聯航空) and Tong Lung Metal Industry Co (東隆五金), failed to pay off debts after the Asian financial crisis in 1997.

Frank Chen (陳田鈺), the company's chairman, and Chen Ying-chieh (陳英傑), the company's president, along with other company officials, were questioned earlier this month regarding the case.

At a press conference earlier this month, the company denied the fraud accusations and said that it was sincerely trying to resolve the problems.

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