Prosecutors accuse Taiwan Development chief of involvement in insider trading

State-controlled Taiwan Develop-ment Corp (台灣土地開發) chairman Su Teh-jien (蘇德建) became embroiled in a scandal yesterday, as the Taipei District Prosecutors' Office accused him of insider trading, which is also said to involve President Chen Shui-bian's (陳水扁) son-in-law Chao Chien-ming (趙建銘).

Approached by the Taipei Times yesterday, Taiwan Development said it could not comment on the matter until it received more information about the prosecutors' decision.

But the company said in a statement to the Taiwan Stock Exchange yesterday that Su and company president Chung Chih-wen (鍾智文) -- the two who were summoned on Wednesday by prosecutors for questioning -- went to work as usual yesterday, and stressed the stability in the company's management.

Su was accused after being questioned until 3am yesterday on charges of insider trading involving the disposal of Taiwan Development shares by the state-controlled Chang Hwa Commercial Bank (彰化銀行) in July last year.

Su's alleged irregularities, however, may have jeopardized his position, Minister of Finance Joseph Lyu (呂桔誠) said earlier this week that the ministry, which governs state holdings, would complete its administrative investigation by May 24 and would relieve Su of his chairmanship if he is found to have been responsible for the scandal.

Taiwan Development was once a state-controlled entity with around 44 percent owned by the government and its affiliates. The company transformed into a professional real estate developer last September after selling its trust business to Jih Sun Financial Holding Co (日盛金控) one month before.

Meanwhile, in response to accusations from a lawmaker that state-controlled Hua Nan Financial Holding Co (華南金控) may also have been involved in the insider trading scandal, the company said yesterday that it had not sold any of its 5.7 percent stake in Taiwan Development since purchasing it in 1999.

Hua Nan Financial said in a statement released yesterday that its chairman Lin Ming-cheng (林明成) and his family have never traded Taiwan Development shares.

Chang Hwa chairman Chang Po-shin (張伯欣) and president Chen Chen-chao (陳辰昭) as well as Waterland Securities Co's (國票證券) board director Tsai Chin-wen (蔡清文) have also been questioned by the prosecutors about their roles in the alleged illegal trading.

The Financial Supervisory Commission has said it would replace the heads of financial institutions if they are indicted in the future.