Chunghwa Telecom denies allegations of insider trading

Chunghwa Telecom Co (中華電信), the nation's top telecommunications company, yesterday denied it had withheld or leaked any information about the acquisition of a handset retailer beforehand.

In a statement the company said it had not been involved in any wrongdoing in the purchase, after prosecutors began investigating the deal yesterday.

The statement was issued in response to comments by Chinese Nationalist Party (KMT) Legislator Lwo Shih-hsiung (羅世雄), who on Monday voiced his suspicions about the unusual rally in shares of Senao International Co (神腦國際) before Chunghwa Telecom's board approved the acquisition on Dec. 26.

"After being alerted by a lawmaker, we dispatched prosecutors to investigate whether there may have been insider trading," said Lin Jinn-tsun (林錦村), a spokesman for the Taipei District Prosecutors' Office.

Chunghwa announced on Dec. 26 that its board had given the go-ahead to purchase a 32.5 percent stake, or 72.52 million shares, in the local handset retail chain.

Chunghwa said at the time that it would buy Senao shares at NT$15.10 each to boost its lukewarm third-generation (3G) telecom service business.

The Economic Daily News yesterday printed allegations by a board director that Chunghwa had doctored its board meeting record last November to hide evidence of insider trading.

The report, citing Simon Chang (張緒中), head of the company's labor union who is also one of the board directors, said the company erased the records on board members discussing a plan to buy Senao shares.

Additional reporting by Bloomberg