Former Macoto boss Lin gets the nod

Lin Cheng-yi (林誠一), a senior adviser to President Chen Shui-bian (陳水扁) and former chairman of the now defunct Macoto Bank (誠泰銀行), was elected chairman of China Development Financial Holding Co (中華開發金控) yesterday, wrapping up a chaotic two-week period in the boardroom of the nation's sixth-largest provider of financial services.

"Under chairman Lin's leadership, China Development Financial is expected to begin smoothing mutual management and improving corporate governance and shareholders' rights and interests," China Development Financial spokesperson Sherie Chiu (邱德馨) told reporters yesterday.

Lin's appointment received the unanimous support of directors who were present at the company's ad hoc board meeting yesterday, Chiu said.

China Development has 21 board members and three superintendent seats. Only one independent director, Cyrus Chu (朱敬一), and one superintendent, Chen Tien-jy (陳添枝), were absent yesterday. Chu is a former vice president of Academia Sinica, and Chen is a former president of the Chung-Hua Institution for Economic Research.

Earlier yesterday, Lin was recommended by the Ministry of Finance to replace former chairman Chen Mu-tsai (陳木在) on the holding company's board.

This move, approved only as late as yesterday morning by the Cabinet, came as a big surprise, even though there was much speculation that Lin, who is known as a close ally of President Chen Shui-bian (陳水扁), would be hand-picked over the three other candidates to meet the wishes of the powers that be.

Minister of Finance Joseph Lyu (呂桔誠) yesterday sternly rebutted this speculation.

"This had nothing to do with the Presidential Office. What we were concerned about was the candidate's professional skill and his background," Lyu told reporters after China Development Financial had elected Lin their new chairman.

"His combination of financial expertise and legal background were the major reasons why he stood out," he said.

Lin, 69, graduated from National Taiwan University's law department and holds a master's degree from Keio University's Graduate School of Law in Japan. He has served as a lawyer for nearly 20 years.

Currently the chairman of the Macoto Cultural and Educational Foundation (誠泰文教基金會), the Japanese-savvy banker served as director of the board at the Taiwan Cooperative Bank (合作金庫銀行) between 1987 and 1993 and chairman of the Third Cooperative of Taipei City (台北市三信) between 1983 and 1996.

Macoto bank was known for its creative marketing strategies in promoting credit cards. It once issued a "son of Taiwan" credit card, which broke records after featuring President Chen as its spokesman, underlining the strong ties between Lin and Chen.

Macoto was merged with Shin Kong Financial Holding Co (新光金控) through a share swap deal as a 100-percent owned subsidiary last October. The merger was priced at NT$20 billion (US$616 million).

"We hope Lin can help strengthen corporate governance of China Development Financial and boost transparency of information disclosure," Lyu said.

Liu Teng-cheng (劉燈城), director-general of the ministry's National Treasury Agency, said the ministry had contacted the Financial Supervisory Commission to investigate China Development Financial's alleged improper capital flows -- as disclosed by a local Chinese-language business weekly.

According to a cover story published by Business Today (今周刊) in its Thursday edition, China Development Financial is alleged to have benefited certain shareholders over others during its hostile takeover bid of Taiwan International Securities Corp (金鼎證券).