FSC may take action against Jeffery Koo Jr

Jeffery Koo Jr's (辜仲諒) vice chairmanship of Chinatrust Financial Holding Co (中信金控), the nation's seventh-largest financial group, could be at stake as the financial regulator may take action if the banker does not return to answer prosecutors' questions next week.

"If the executive of a financial institution refuses to answer a summons, the financial regulator may review whether that person is `fit and proper' for the job," Financial Supervisory Commission spokesperson Susan Chang (張秀蓮) told reporters yesterday.

Chang said the commission may discuss Koo's position if he does not return from the US to face prosecutors' questions on Nov. 22.

Seeking to question the executive over his company's troubled takeover of larger rival Mega Financial Holding Co (兆豐金控), prosecutors issued a second summons for Koo last week.

According to the Code of Criminal Procedure (刑事訴訟法), prosecutors may arrest anyone who -- for no valid reason -- continuously ignores a summons from a prosecutor or a court.

In response, Chinatrust Financial said only that it was cooperating with investigators.

The company did not confirm that Koo would return to Taiwan after finishing his two-month Eisenhower Fellowship program in the US on Nov. 18.

The scandal-plagued financial group experienced a management shakeup after three of its high-ranking executives were detained last month.

In the latest twist to the saga, Lin Shiaw-pin (林孝平) resigned as the company's chief strategy officer late on Monday.

Jason Wang (王正新), Chinatrust Financial's former chief research and development officer, took over from Lin as the firm's new chief strategy officer and spokesman.

Prosecutors said last month that their investigation might lead to a variety of charges, including breach of trust, illegal trading and violation of the Banking Law (銀行法).

The commission has said that Chinatrust Financial invested in Mega Financial via structured notes transacted through its Hong Kong bank branch, but later transferred those notes to another Hong Kong-based company, Red Fire Development Ltd.

Red Fire later cashed in the structured notes, making a profit of more than US$31 million. The money was returned to Chinatrust at its board members' cost after intervention by the financial regulator.

Prosecutors suspect that Red Fire is a front company controlled by the Koo family and are trying to determine whether anyone has profited illegally from the Mega Financial deal.