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FSC may quiz Koo over China Development dealings

The Financial Supervisory Commission (FSC) might summon Angelo Koo (辜仲瑩), president of China Development Financial Holding Corp (中華開發金控), to answer questions amid a probe into the company's alleged involvement in illegitimate transactions, the financial watchdog said yesterday.

"The commission will complete its investigation within two weeks ? based on newly discovered events," commission chairman Kong Jaw-sheng (龔照勝) said during a question-and-answer session at Legislative Yuan's Finance Committee yesterday.

The FSC boss made the remarks in response to the questions and criticism from legislators who cited a local magazine's cover story last Thursday about Koo's alleged involvement in embezzlement at China Development Financial, the 13th-biggest financial group in the country.

The Chinese-language Business Today (今周刊) alleged that Koo bypassed the financial holding company's board of directors to use funds from the firm and its subsidiaries to invest in financially troubled China Life Insurance Co (中國人壽), which is owned by the Koo family.

The report criticized Koo for neglecting shareholder interests and corporate governance, as well as his controversial leadership.

China Development Financial had previously been accused of spending money to the benefit of certain shareholders who were allegedly foreign investors during a hostile takeover attempt on smaller rival Taiwan International Securities Corp (金鼎證券). Such actions, if proven, could violate insider trading regulations.

Kong said the commission sent a letter to China Development Financial last Saturday demanding an explanation of its controversial stock trading activities.

The commission has not ruled out the possibility of summoning the firm's management, including Koo, to provide explanations in person, Kong said.

The investigation would focus on whether the company fulfilled its obligations for full disclosure before getting the board's approval for its actions, he said.

"We have finalized the administrative investigation [into the alleged illegal transactions] and handed the results over to the prosecutors," Kong said.

China Development Financial said it would follow the commission's demands and do what it is required to do, spokeswoman Sherie Chiu (邱德馨) said in a telephone interview yesterday.

The firm's shares closed down 1.25 percent at NT$11.85 on the Taiwan Stock Exchange yesterday.
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