Su says government will stop major loan defaults

Premier Su Tseng-chang (蘇貞昌) yesterday said that major defaults on bank loans would not be allowed to happen in the future, but he did not elaborate by detailing any solutions.

Banks public the names of major defaulters on loans exceeding NT$100 million (US$3.02 million) over the past two days to comply with an instruction issued by the Financial Supervisory Commission on March 1, which required all banks, including foreign bank branches, to post the details of major bad loan accounts on their Web sites by the middle of the month.

Nearly individuals and corporate bodies had defaulted on a total of NT$371.93 billion in loans as of last June, according to data compiled by the commission.

"These bad debtors have created lots of problems for our banks," Su said, when he was approached by reporters as he entered the legislature for a meeting early yesterday morning.

Referring the published lists of major defaulters, Su said most had owed a great deal of money since the authoritarian era.

"We will not tolerate or allow this to happen in the future," Su said. "In addition, the government will do whatever it takes to retrieve the money owed by these bad debtors ... The Democratic Progressive Party government has done a good job controlling and preventing bad debts and we will continue to do so."

The premier also said that it the government would take on the task of preventing future potential corruption, and ensure that debtors were no longer able to bribe government officials.

However, when asked how the government would achieve this, and how the money could be recovered now that most of the bad debtors had fled Taiwan, Su did not make any further comment.

An from a local bank said on Thursday that the government's decision to force banks to publish the names of those who had defaulted on large loans would not help banks recoup their losses.

Citing example of Chen You-hao (陳由豪), founder of the Tuntex Group (東帝士集團), and Tseng Cheng-jen (曾正仁), founder of the Kuang San Group (廣三集團), who top the list of major debtors, the executive said most of those named were disgraced businessmen who have fled the country and gone into hiding abroad.

Most of these debtors were already known to the public, the executive said, adding that he doubted publication of the list would subject them to any additional pressure.

Instead flogging dead horses, the executive said, the government should authorize the banks to publish the names of current major borrowers who have been overdue in the repayment of debts for more than three months.

Referring cases where debtors continue living an extravagant life style despite still owing banks an excessive sum of money, Vice Minister of Justice Lee Chin-yung (李進勇) said yesterday that the ministry is now drafting a new clause which would ban the loan defaulters from living in luxury.

Upon of the draft clause, it would be forwarded to the Judicial Yuan as a reference for an amendment to the Bankruptcy Law (破產法), Lee said.