Lawmakers finger finance regulator over Rebar case

Lawmakers across party lines yesterday lashed out at heads of the Financial Supervisory Commission and subordinate Banking Bureau, demanding that officials step down to take responsibility for alleged improper decision-making linked to the snowballing Rebar Group saga.

As the suspected embezzlement scandal widened since two subsidiaries of the Rebar Asia Pacific Group (力霸亞太企業集團) claimed insolvency protection last week, lawmakers grilled the commission Chairman Shih Jun-ji (施俊吉) yesterday, criticizing the financial regulator for not preventing the crisis from commencing at the outset.

The commission should have taken over The Chinese Bank (中華銀行) after it found evidence of possible embezzlement misconduct in November last year, Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) said in a question and answer session in the legislature's Financial Committee yesterday.

"Your bad decision-making has wasted taxpayers' money," Fai said, panning both Shih and Banking Bureau Director General Gary Tseng (曾國烈) who he said were "not suitable [for their jobs] at all and should resign at once."

Minister of Finance Ho Chih-chin (何志欽) and central bank Governor Perng Fai-nan (彭淮南) also attended the session to report on the supportive measures being taken to mitigate the downside of the Rebar Group scandal.

Shih said The Chinese Bank was taken over by the government last Friday after the lender lost NT$43 billion (US$1.31 billion), or 27 percent of its total deposits, in its last three days of independent operation.

Earlier this week, the commission said it found evidence several months ago suggesting misconduct and embezzlement within the Rebar Group. The commission handed major shareholder Wang You-theng (王又曾) and several family members over to prosecutors for investigation last November, it said.

But both Democratic Progressive Party Legislator Yu Jan-daw (余政道) and People First Party Legislator Christina Liu (劉憶如) said the commission's failure to take serious action has impinged upon the rights and interests of the public and shareholders.

KMT Legislator Lee Jih-chu (李紀珠) said that the commission's tardy performance had caused seven blacklisted lenders to chalk up NT$41.1 billion in losses at the end of last September, up 89 percent from a quarter earlier, which exceeded the available money in the government's NT$40 billion financial restructuring fund.

The commission should have taken over those banks when their adjusted net worth became negative after factoring in the loss incurred from the sale of bad debts, Lee said citing the restructuring fund's regulations.

In response to the legislators' criticisms, Shih said Rebar's complex financial problems were not forged in one day and the regulator has endeavored to fulfill its supervision duty and expects the decision to end The Chinese Bank's lending operations will produce positive results.