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China Development Financial chairman mum on allegiance

Less than two months ahead of its board elections, state-controlled China Development Financial Holding Co (中華開發金控) chairman Lin Cheng-yi (林誠一) yesterday refused to declare whether he would support government or private shareholders.

As a government-appointed chairman at the nation's 12th-largest financial services provider, Lin nevertheless bought 10 million shares as a private individual, triggering concerns he would side with the largest private shareholder, the Koo family, to snatch management during the shareholder meeting next month.

In the legislature's Finance Committee yesterday morning, Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) forced Lin to come clean.

"Who will you support with your 10 million shares?" Fai asked during a question-and-answer session.

Lin insisted that as chairman he was in no position to choose sides.

But as the lawmaker pressed him for more details, Lin said that if Minister of Finance Ho Chih-chin (何志欽) kept him as the government's representative and chairman of the company, he most certainly would support public shareholders.

His answer seemed to indicate that the 70-year-old chairman, who has close ties with President Chen Shui-bian (陳水扁), was beyond government control.

Despite lawmakers' repeated questions, Ho refused to comment on Lin's response.

On two occasions before the meeting, Lin had asked for leave from the Finance Committee, to avoid lawmakers' questions.

An angered committee passed a motion three weeks ago stipulating that Lin would be removed from his post if he once again failed to attend the meeting.

The government controls 11 percent of China Development Financial stocks and seven out of its 21 board seats.

The Koo family, led by president Angelo Koo (辜仲瑩), has boosted its shareholding to over 16 percent, statistics released on April 17, the last day for share transfers, showed.

Lin, former chairman of the defunct Macoto Bank (誠泰銀行), was elected China Development Financial's chairman in late March last year to replace former chairman Chen Mu-tsai (陳木在).

Hua Nan Financial Holdings Co (華南金控), another state-controlled institution, is also scheduled to hold a board election next month.

Although the government controls 33.88 percent of Hua Nan Financial — higher than the major private shareholders' 28 percent — chairman Lin Ming-cheng's (林明成) status as a private representative has triggered opposition by lawmakers, who have requested that that the government be awarded more than 11 seats and appoint a government representative as chairman.
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