FSC denies insider leak helped Rebar chairman escape

The financial regulator said its officials had not leaked information to allow Rebar Asia Pacific Group (力霸亞太企業集團) founder and chairman Wang You-theng (王又曾) to flee to China amid a controversial corporate scandal.

Wang left Taiwan on Dec. 30 for Shanghai after two Rebar subsidiaries -- China Rebar Co (中國力霸) and Chia Hsin Food & Synthetic Fiber Co (嘉新食品化纖) -- applied to the Taipei District Court for insolvency protection on Dec. 29.

In a statement issued yesterday, the Financial Supervisory Commission said that both the Taipei District Prosecutors' Office and the Investigation Bureau had concluded that there had been no disclosure by commission officials which would have facilitated Wang's escape.

"Prior to China Rebar and Chia Hsin's applying to district court for business reorganization, [the commission's] Examination Bureau and Taiwan Stock Exchange Corp did not perform a financial check on either the two companies or the Union Insurance Co (友聯產險)," the statement read.

"Therefore, there should be no such speculation of an inside leak to enable Wang's fleeing the country," it said.

Arrest warrants were issued by prosecutors on Friday against Wang and his wife, Wang Chin She-ying (王金世英), who left for Shanghai on Jan. 1. Also on Friday, commission chairman Shih Jun-ji (施俊吉) tendered his resignation under mounting pressure for lax supervision of the Rebar Group.

The commission's Banking Bureau Director General Gary Tseng (曾國烈) also resigned on Friday to serve as counselor at the commission.

The Rebar Group is the parent company of more than 130 subsidiaries, including listed China Rebar and Chia Hsin.

The multiple cross shareholding relationships that exist among Rebar companies, added to the apparent lack of corporate governance within the Rebar Group have made the conglomerate's financial problems more difficult to address than expected.

On Jan. 4 Chia Hsin said that as of September last year, it had accumulated debts of NT$19.9 billion (US$607.5 million) and losses of NT$11.47 billion in the past seven years, while China Rebar, which acts as a guarantor for Chia Hsin, said it had debts worth NT$20.7 billion and losses of NT$13.84 billion for the same period.

News of insolvency at China Rebar and Chia Hsin led to a bank run at The Chinese Bank (中華銀行), also part of Rebar Group, on Jan. 5 and prompted a takeover by the government at midnight on the same day.

As of Jan. 11, panicked depositors had reportedly withdrawn approximately NT$55 billion from The Chinese Bank in the previous seven days, a figure the FSC would neither deny nor confirm on Friday.

Prosecutors and investigators last Wednesday raided the Rebar Group headquarters in Taipei and on Thursday detained Chia Hsin general manager Wang Lin-i (王令一) and Union Insurance Co (友聯產險) president Frank Wang (王事展).