Thu, May 25, 2006 - Page 12 News List

FSC may discipline bank chair

STOCK TRADING The watchdog is investigating Chang Hwa Commercial Bank's chairman, and could decide whether to punish him this week

By Amber Chung  /  STAFF REPORTER , WITH BLOOMBERG

The nation's financial regulator may decide later this week to discipline Chang Po-shin (張伯欣), chairman of Chang Hwa Commercial Bank Ltd (彰化銀行), after prosecutors late on Tuesday named him as a defendant in a case of alleged illegal share trading.

Susan Chang (張秀蓮), spokesperson for the Financial Supervisory Commission, said the commission was in the middle of an administrative probe into Chang's alleged misconduct.

The purpose of the investigation was to verify whether Chang had breached the standards of integrity and honesty that the regulator demands of heads of financial institutions, Chang said in a telephone interview yesterday.

"We do not exclude the possibility of making a decision on how to deal with chairman Chang this week, at earliest," she said.

Chang said the commission had demanded the bank make an explanation after prosecutors on Tuesday night named Chang, along with two other high-ranking executives, as defendants in an alleged insider-trading case involving the sale of Taiwan Development Corp (TDC, 台灣土地開發) shares previously owned by Chang Hwa.

The other two officials are the lender's president, Chen Chen-jau (陳辰昭), and senior vice president, James Chen (陳允進).

Chang Hwa yesterday confirmed the defendant status of the three executives, while insisting that all of the activities of the bank and its officials had complied with the law.

"All three officials are back at work today after being subpoenaed by the prosecutors' office to give further information last [Tuesday] night," Chang Hwa's spokesman Miles Chang (張明文) said.

"The incident has no impact on the bank's finances and business," he added.

The three executives have been reporting to the commission in person and in writing since they were questioned two weeks ago, he added.

Chinese Nationalist Party (KMT) Legislator Chiu Yi (邱毅) has accused Chao Chien-ming (趙建銘), President Chen Shui-bian's (陳水扁) son-in-law, of buying 20 million TDC shares under the name of his mother, Chien Shui-mien (簡水綿), after learning the stock was likely to rise.

Chang Hwa said its chairman and president met with Chao prior to selling 12.45 million shares of Taiwan Development on July 25 last year.

The lender said Chao did not declare his intention to buy those shares. While Chien was one of the potential buyers, the lender said it was not aware that she was Chao's mother at that time, according to Chang.

"We decided to proceed with the disposal plan even after Taiwan Development disposed of its debt-ridden trust business and obtained a NT$16.5 billion syndicated loan because we were not optimistic about the company's outlook," Chang said.

"We did not profit anyone through the share sale, which was purely an investment call," he said.

On Tuesday, prosecutors searched the offices of the three executives at Chang Hwa's Taipei headquarters, and summoned them in capacity of defendants, instead of witnesses.

Taiwan Development

In related news, the Ministry of Finance last night said it would remove TDC chairman Su Teh-jien (蘇德建) if prosecutors release him on bail, or detained or indict him.

TDC president Chung Chih-wen (鍾智文) will also be relieved of his presidency if Su goes, Vice Minister of Finance Chen Shu (陳樹) said.

Su was being questioned by prosecutors yesterday and was not available to verify some doubtful points, he said.

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