China Steel facing critical change in chairmanship

The board of China Steel Corp (中鋼) yesterday voted to retain Chiang Yao-chung (江耀宗) as chairman of the nation's largest steelmaker.

However, Chiang may not stay in the position for long as the government is gearing up to appoint former chairman Lin Wen-yuan (林文淵) to take the helm of China Steel by holding an ad hoc board meeting next Friday.

The government is the largest shareholder of China Steel, holding a 22.6 stake in the company. As Chiang is an institutional representative appointed by the Ministry of Economic Affairs, the ministry can transfer the appointment to Lin without going through the board.

Lin is currently the chairman of Taiwan Cogeneration Corp (台灣汽電共生公司) and an independent director at Taiwan High Speed Rail Corp (台灣高鐵).

Chiang took over Lin's position in October 2005 after Lin resigned amid controversy over a stock bonus of more than NT$40 million (US$1.2 million) he received as chief executive officer. Lin had said then that he would donate all of his stock bonuses to charity.

However, the administration supports a comeback for Lin given his strong influence in Kaohsiung, where China Steel is based.

By heading the state-controlled corporation, Lin is expected to help the Democratic Progressive Party garner more votes in next year's presidential election.

A trusted subordinate of President Chen Shui-bian (陳水扁), Lin is active in political and business circles in Kaohsiung and played an important role in Chen's previous campaign activities in the south.

If Lin returns next month as reported, it will be the fifth change in China Steel's chairmanship in six years -- from Wang Chung-yu (王鍾渝) to Kuo Yen-tu (郭炎土), Lin, Chiang and back to Lin. Each shift was marred by disputes and allegations of political maneuvering.

Chiang's reluctance to carry out the government's name-change campaign -- removing the name "China" from the names of local companies -- also likely played a role in his downfall.

Meanwhile, shareholders of China Steel yesterday also approved a cash dividend of NT$2.78 per share and 30 percent stock dividend.

With the demand for steel and iron expected to rise 5 percent, the company is expected to generate more profit this year, company president Chen Yuan-cheng (陳源成) said, citing statistics provided by the International Iron and Steel Institute.

The company posted after-tax earnings of NT$39.16 billion, or NT$3.56 per share, on sales of NT$177.66 billion last year.

China Steel's production was 9.95 million tonnes last year, up 2.6 percent

from 2005, Chen said. Sales also increased 4.3 percent to 10.22 million

tonnes last year, he said.

Shares of China Steel were unchanged at NT$39.9 on the Taiwan Stock

Exchange, trailing the benchmark TAIEX's 1.1 percent rally.