Chinatrust executives charged

Three executives of Chinatrust Financial Holding Co (中信金控) were charged with breach of trust, insider trading and illegal trading after an investigation into the company's purchase of a stake in larger rival Mega Financial Holding Co (兆豐金控), prosecutors said yesterday.

The charges against the executives, including former chief financial officer Perry Chang (張明田), now senior manager to the president of the company, could land them in prison for up to two decades, said the statement from the Taipei District Court Prosecutors' Office yesterday.

Chang faces as long as 20 years in jail for violating securities and banking laws, Lin Chin-chun (林錦村), deputy chief of the prosecutors' office, said in a phone interview yesterday.

He could also be fined as much as NT$250 million (US$7.6 million), the prosecutors' office said.

Deng Yan-dun (鄧彥敦), head of Chinatrust Financial's compliance department and senior vice president Sean Lin (林祥曦) were also charged.

Prosecutors will seek a 20-year jail term and NT$190 million fine for Lin and an 18-year sentence and NT$130 million fine for Deng, the statement said.

All three executives have been detained since October and could not be reached for comment. The prosecutors ruled in the evening to release Chang, Deng, and Lin on bails of NT$12 million, NT$10 million and NT$10 million respectively.

"We will keep in close contact with their attorneys and families and provide assistance if necessary," said Chinatrust Financial spokesman Jason Wang (王正新) in a phone interview yesterday, declining to comment further.

The company would discuss its response, including finding replacements for Deng and Lin, after the Lunar New Year holiday, Wang said.

The company has not planned to convene an emergency provisional board meeting today, he added.

The financial group said it would not pay the fines on behalf of the three executives as this would damage shareholders' rights and interests.

In July, Chinatrust Financial, the nation's seventh biggest financial group by assets, was ordered by the financial regulator to cut its stake in Mega Financial within 12 months after misusing funds to buy the shares.

Chinatrust and its subsidiaries own 15.6 percent of Mega, Taiwan's third largest financial holding firm by assets.

Six executives have been accused so far of using NT$27.5 billion to buy 9.9 percent of Mega Financial without the Chinatrust board's approval. That includes the illegal purchase of US$390 million worth of loan notes, convertible into Mega shares, using money earmarked for deposits, and then locking in profits from the transaction by insider trading.

The highest ranking, Jeffrey Koo Jr (辜仲諒), is the son of the company's founder Jeffrey Koo Sr(辜濂松) and was the former vice chairman of Chinatrust Financial, whose Hong Kong branch bought the convertible notes. Koo resigned from his post in November.

The involvement of Steven Cheng (陳俊哲), Koo Sr's son-in-law, is also being probed, along with that of Lin Shiaw-pin (林孝平), former chief strategic officer, the statement said.

Prosecutors will investigate Koo, Cheng and Lin Shiaw-pin in a separate case once they have been arrested and brought back to Taiwan, the statement said.

Wang said the company had no knowledge of if and when Koo Jr and Cheng planned to return to Taiwan.

An arrest warrant was issued Nov. 23 for Koo Jr, who was placed on the police's most-wanted list on Dec. 4.