Thu, Jul 26, 2007 - Page 11 News List

Ministry to appeal after court backs UMC actions

MORE LAW Economic affairs officials were irritated by the decision, which says United Microelectronics Corp did not break the law by taking a stake in a Chinese firm

STAFF WRITER , WITH BLOOMBERG AND AFP

The Ministry of Economic Affairs said yesterday that it would appeal a court ruling overturning a NT$5 million (US$152,500) fine that it imposed on United Microelectronics Corp (UMC, 聯電) for investing in a Chinese firm without regulatory approval.

The Taipei Administrative High Court said Tuesday that the ministry's decision in February last year to fine the world's second-largest contract chipmaker had no merit.

The court said the chipmaker's links to China's He Jian Technology (Suzhou) Co (和艦) did not constitute an investment.

Earlier, in a July 19 ruling posted on its Web site, the court said that UMC's relationship with He Jian could not be classified as an investment as the company provided only technical assistance to the Chinese chipmaker. There was not sufficient evidence to prove UMC invested in He Jian, the court said.

In response to Tuesday's official announcement, the ministry's Investment Commission said it would appeal the case after receiving the verdict, an official told the Taipei Times yesterday, on condition of anonymity because she was not authorized to talk to the press.

Minister of Economic Affairs Steve Chen (陳瑞隆) told the Chinese-language USTV cable television station earlier yesterday that the ministry would appeal the case.

"We will try to get more evidence and to clarify our stance to the court," Chen was quoted as saying.

UMC, meanwhile, maintained a low profile after the ruling yesterday, saying it would respond according to what the ministry decided to do next.

"We have no comment on the ruling," said Sandy Yen (顏勝德), a public relations officer with Hsinchu-based UMC. "The ball is now in the ministry's court and we will react to its next move."

The ministry accused former UMC chief Robert Tsao (曹興誠) and other executives of failing to seek authorization for providing technical know-how to He Jian Technology, based in Suzhou in Jiangsu Province, in November 2001.

The ministry said that HeJian agreed to give UMC a 15 percent stake in the firm worth US$110 million in return for the assistance, which the ministry claimed had violated laws on investment activities by local firms in China.

The government restricts investment in Chinese companies to limit technology moving to China.

UMC shareholders in June 2005 passed a resolution allowing the company to take a 15 percent stake in He Jian as compensation for "past assistance." That stake has since been placed in trust, UMC said in August last year.

Separately, prosecutors in January last year charged Tsao with breach of trust, alleging he illegally invested in HeJian without shareholder approval.

Tsao was also accused of violating accounting rules for his role in the HeJian case. His deputy, John Hsuan (宣明智), was indicted on the same charges. Tsao resigned as chairman in January last year after the indictment.

That case is expected to produce a verdict by next month.

Additional reporting by Lisa Wang and Jessie Ho

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