Fri, Nov 24, 2006 - Page 12 News List

Chinatrust tight-lipped on Koo warrant

SEE NO EVIL The nation's No. 4 financial company by market value said yesterday it would not confirm media reports that Jeffrey Koo Jr had traveled to the US from Japan

By Amber Chung  /  STAFF REPORTER

Chinatrust Financial Holding Co (中信金控) was tight-lipped about what it would do in response to the issue of a warrant for the arrest of vice chairman Jeffrey Koo Jr (辜仲諒) yesterday.

"Chinatrust Financial should do damage control by removing Koo or asking him to resign as vice chairman as soon as possible," said Fiona Uang (汪姵吟), an analyst who tracks the financial sector at Mega Securities Co (兆豐證券).

The company board should deal with the issue in the meeting today, Uang said, adding that Koo's choice to leave the company would not negatively affect the operations of the financial group. The institution has a professional management team, she said.

But if the board does nothing and Koo continues to stay abroad, Chinatrust Financial will face mounting questions about its corporate governance, calling into question its reputation, image and share price, she warned.

The Taipei District Prosecutors' Office issued a formal arrest warrant for Koo yesterday after he failed to respond to a second subpoena on Wednesday related to his role in the company's alleged misuse of funds during the controversial takeover investment in Mega Financial Holding Co (兆豐金控).

The probe into Chinatrust Financial's investment in state-controlled Mega Financial, the nation's second-largest financial company by market value, exposes the weakness of the company's corporate governance, Fitch Ratings said in a statement on Wednesday.

However Fitch said the financial impact, if any, would be limited.

"Last but not the least, the heightened investigations and media coverage of this scandal could work in a positive way, in Fitch's view, as it could push the company towards adopting a better corporate governance regime," the statement read.

The Chinese-language United Evening News reported yesterday that Koo had gone to the US from Tokyo to collect more evidence in the hope of proving his innocence. But Chinatrust Financial, the nation's fourth-biggest financial company by market value, said it cannot confirm the report as the company had no knowledge of Koo's whereabouts.

Koo could be placed on the wanted list at the end of this month at the soonest if prosecutors are not able to arrest him.

The Financial Supervisory Commission reiterated yesterday that the regulator will demand Chinatrust Financial strip Koo of his board membership and thus vice chairmanship within 10 days as soon as he is put on the wanted list.

Should the company fail to meet this demand, the commission will discuss mandatory removal by the regulator, commission spokesperson Susan Chang (張秀蓮) told a press conference yesterday.

The handling of this case would become the conventional practice in dealing with similar situations in the future, Chang added.

Since Koo is the representative appointed by a company named Kuan He Development (寬和開發) on Chinatrust Financial's board, his vice chairmanship with Chinatrust Financial can be nullified if Koo offers his resignation to Kuan He, Chinatrust Financial's head of public relations Vanney Cho (卓長興) said in a phone interview yesterday.

But thus far Chinatrust Financial has not received any notice from Kuan He about any changes of representative appointment, Cho said.

No discussion of management changes were included in the meeting agenda for today, he added.

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