BenQ senior executives charged

BenQ Corp (明基) yesterday confirmed that two of its senior executives were questioned by prosecutors on Wednesday and named as defendants in a case of suspected insider trading.

Investors reacted negatively to the news, pushing the company's shares down.

Shares of BenQ dropped 0.76 percent to NT$12.9 yesterday on the Taiwan Stock Exchange, after chairman Lee Kun-yao (李焜耀) was released on Wednesday night on bail of NT$15 million (US$453,100) after being charged with a violation of the Securities and Exchange Law (證券交易法).

Company president Sheaffer Lee (李錫華) was released on bail of NT$10 million, the company said in a filing to the Taiwan Stock Exchange.

BenQ, the nation's biggest maker of branded mobile phones, had its headquarters raided by Taoyuan prosecutors on March 13. The company's spokesman and senior financial executive Eric Yu (游克用) was later detained by prosecutors for his part in the alleged insider trading.

On Wednesday, prosecutors in Taoyuan summoned Lee Kun-yao and Sheaffer Lee for questioning that lasted approximately eight hours, before the prosecutors decided to release both executives on bail.

"We discovered new evidence through the questioning and the Lees seemed to be a lot more involved in the case than we had originally expected, so we decided on bail deals for them," John Chang (張進豐), spokesman for the Taoyuan District Prosecutors' Office, told the Taipei Times in a phone interview.

The Lees left the Taoyuan District Prosecutors' Office at around 11:30pm on Wednesday night. They declined all requests for comment. But in an e-mailed statement released yesterday, Lee Kun-yao denied the company was involved in insider trading.

Lee Kun-yao said the company was not involved in any irregularities and denied speculation that stock which should have been given to the company's overseas employees as bonuses had been stolen and traded.

He also defended Yu's innocence following his detention on allegations of illegally selling stock options via four companies registered overseas ahead of the release of the company's 2005 fourth-quarter losses in March last year.

Lee Kun-yao was viewed as key in orchestrating the merger with Siemens AG's unprofitable mobile-phone unit in 2005, which BenQ announced it would stop funding last September to halt further losses.

"The company's chairman and president went to the Taoyuan Prosecutors' Office for questioning about the trading of employees' bonus shares on April 11, with the aim of helping the investigators discover the truth as soon as possible," BenQ said in a filing to the Taiwan Stock Exchange.

The company's executives will be required to apply for permission from prosecutors before making any future business trips overseas, the company said.