Tue, May 23, 2006 - Page 12 News List

Finance minister says TDC loans were above board

'NORMAL TRANSACTIONS'Joseph Lyu said that the loans granted to the Taiwan Development Corp when he was Bank of Taiwan chairman were certified by the FSC

CNA , TAIPEI

Loans totaling NT$16.5 billion (US$513.3 million) to the Taiwan Development Corp (TDC, 台灣土地開發) by a banking consortium were a "normal financial transaction" that was legal and reasonable, Minister of Finance Joseph Lyu (呂桔誠) said yesterday.

Lyu made the remarks in reply to reporters at the Government Information Office, where he attended a briefing on an upcoming sustainable economic development conference.

The minister explained that of the total loans, NT$14.5 billion was an "old loan" that TDC needed to transform itself into a non-financial institution, while the other NT$2 billion was supplementary capital needed by TDC when it sold a trust arm, and both loans were made with "100 percent collateral security."

Lyu said that TDC had successfully transformed itself with the NT$16.5 billion in loans from a syndicate of 29 banks led by the Bank of Taiwan (台灣銀行), whose chairman at the time was Lyu.

As the Bank of Taiwan had led the consortium in an "independent, neutral and professional" way, Lyu said he had no comment on how the information about the loans could have been used or how the transformed TDC has been managed since.

The loan information is at the center of a prosecutor's investigation into an alleged insider trading scandal in which President Chen Shui-bian's (陳水扁) son-in-law Chao Chien-ming (趙建銘) and his mother Chien Shui-mien (簡水綿) are suspected of involvement. Chien's home in Tainan was searched earlier in the day.

Lyu said the security TDC offered for the loans was properly checked and certified by the Financial Supervisory Commission (FSC) as "100 percent collateral security."

"Otherwise, the Bank of Taiwan would not have sponsored the loans," he said.

Meanwhile, TDC said its chairman, Su Teh-jien (蘇德建), did not receive a pay raise of NT$2 million after assuming the post on July 1 last year as some media outlets had reported.

A TDC spokesman said Su's monthly salary in the second half of last year totaled NT$1.35 million, was the same as predecessor Chen Tang (陳棠) during the first half of the year. In addition, he received a year-end bonus of NT$1.01 million, so his yearly income from TDC reached NT$2.36 million, the spokesman said.

Chang Ching-sen (張景森), vice chairman of the Council for Economic Planning and Development and another figure reportedly involved in the TDC insider trading scandal, vowed that he would step down if he was in any way involved or even was found to have the "slightest moral flaw" in regard to the case.

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