The Taipei District Prosecutors' Office said yesterday that it had launched an investigation into suspected wrongdoings by Chinatrust Financial Holding Co (中信金控), the nation's fourth largest financial group. The company is suspected of breach of trust and illegal trading.
"We are undertaking probes into three cases [involving the Koo family] against Chinatrust Financial," Taipei District Prosecutors Office Spokesman Lin Jinn-tsun (
The cases are Chinatrust Financial's controversial investment in larger rival Mega Financial Holding Co (兆豐金控), China Development Financial Holding Corp's (中華開發) disputed hostile takeover of Taiwan International Securities Corp (金鼎證券), and China Life Insurance Co's (中國人壽) alleged insider trading, according to the prosecutor.
Chinatrust Financial is controlled by the Koos, one of Taiwan's richest families.
The investigations center on whether the Koos had committed a breach of trust and illegal trading activities, Lin said.
He shied away from saying if the prosecutors would raid Chinatrust Financial to try to uncover possible evidence or subpoena Jeffrey Koo Jr (
"We will keep digging for evidence, no matter where or to whom it leads to," Lin said.
In response, Chinatrust Financial said they had not been approached by the prosecutors or investigators about the alleged cases.
The company stayed low-key, as "we are worried that the investigation might have a very negative impact on the company's image and staff's morale," an executive said on condition of anonymity.
The high-ranking official declined to comment on whether the ongoing investigation could affect Chinatrust Financial's plan to introduce overseas investors, saying that the plan is in its very early stages and no foreign investors had expressed interest so far.
Chinatrust Financial has been penalized twice by the financial regulator for its flawed investment process in Mega Financial through complex financial operations and the misuse of funds.
These actions were suspected of benefiting an unnamed third party.
The company's overseas expansion and investment plans were frozen and Jeffrey Koo Jr was forced to step down as Chairman of Chinatrust Commercial Bank (
Meanwhile, China Development and its management was suspected of involvement in illegitimate investment approaches in an attempt to acquire Taiwan International, as well as allegedly engaging in embezzlement to aid the then financially troubled China Life, which is also controlled by the Koo family.
China Life has been under investigation for more than a year on suspicion of insider trading on questionable share sales before the insurer announced financial losses, according to the prosecutors office.
The Financial Supervisory Commission said they would not comment on cases that have entered the judicial investigation process.
The commission declined to elaborate on whether the Koos had failed to meet the "fit and proper" and integrity requirements for people in charge of financial institutions and if the financial watchdog would launch its own financial probes into their companies.
Shares of Chinatrust Financial closed down 1.12 percent at NT$22.05 (US$0.67) yesterday. China Development Financial ended 1.18 percent lower at NT$12.60, and, and China Life closed 2.96 percent down at NT$14.75.