Tue, Apr 29, 2008 page12

• Ex-SSAC chief denies pocketing company funds

  • By Kevin Chen / STAFF REPORTER
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  Rejecting allegations that he had dipped his hands into the company’s coffers, Kuo Ching-chiang (郭清江), the former chairman and chief executive officer of Sino Swearingen Aircraft Corp (SSAC), said he had created invaluable “goodwill” with the lossmaking Taiwan-US joint venture.

  During an interview with the Taipei Times at the China University of Technology in Taipei on Saturday, Kuo said the company was already operating in the red when he took over nearly three years ago.

  SSAC reported a deficit of US$485.56 million as of September 2005 when he assumed the chairmanship, said Kuo, who has been barred from leaving the country as prosecutors conduct an investigation into allegations of embezzlement and corruption.

  “I cannot assume responsibility for a problem that I didn’t make,” said Kuo, 66, who has a doctorate in aeronautics and astronautics from the Massachusetts Institute of Technology and worked at Rockwell and Boeing for some 20 years.

  The Taiwanese government invested about US$530.2 million in SSAC between March 1995 and September 2005. The government injected another US$116 million in the company during Kuo’s term between September 2005 and June last year. As of the end of Kuo’s tenure, the government had invested a total of US$646.2 million in SSAC, in which the Taiwanese government holds a more than 90 percent share.

  Before the March 22 presidential election, opposition lawmakers accused Kuo of embezzling US$600 million (NT$20 billion) from SSAC. The Special Investigation Panel under the Supreme Prosecutors’ Office are currently investigating the case.

  Kuo said SSAC had assets of US$44.62 million when he took over in September 2005, citing financial documents provided by SSAC chief financial officer Kelly Simmons. When he tendered his resignation in June last year, the company’s total assets had nearly doubled to US$86.76 million, documents showed.

  “Reports by Chinese-language newspapers that SSAC had US$300 million in the bank when I took over are simply ridiculous. What are they talking about? I don’t understand,” he said.

  Kuo said that the company’s balance sheet showed a US$90 million debt for the first time during his tenure, but that was mainly from a loan by major shareholders to SSAC as part of their US$116 million investment (including US$38 million in cash and US$78 million in loans).

  Kuo said he should not be blamed for this debt because “it was the shareholders’ decision to loan the company money, not mine.”

  Kuo has been credited with helping SSAC obtain a US Federal Aviation Administration Type Certificate for its high-performance SJ30-2 jet in 2005 and a Certification of Airworthiness for two production airplanes last year.

  “All these are firsts in the past 40 four years for a new company with a new type of business jet,” he said.

  Kuo said he had showed the company’s financial documents to prosecutors and demanded justice if the allegations were found to be a political plot by opposition lawmakers to damage his reputation and harm the Democratic Progressive Party government.

  Kuo said the Ministry of Economic Affairs was aware he was innocent.

  “Most of the media reports are either false or distorted. But, under the pressure of lawmakers, the ministry still forwarded my case to the Special Investigation Panel,” he said.

  SSAC has practically ceased its manufacturing operation and is on the brink of bankruptcy because of funding problems. The government has only injected US$8.18 million into the company since July last year to maintain the company’s daily administrative operations. It had also suspended a deal to sell an 80 percent stake to a venture capital firm from the United Arab Emirates (UAE) for US$150 million in February, after opposition lawmakers accused it of trying to sell off SSAC at too low a price.

  Kuo said the UAE deal is valuable to Taiwan because, based on his understanding, the investor was willing not only to shoulder the US$85 million loan but also to pay royalty fees to shareholders on future new aircraft sales.

  “The UAE investment is the only alternative that would allow SSAC to stay in business as the government has stopped funding it and there are no other interested buyers,” Kuo said.

  If the deal collapses and the company has to file for bankruptcy protection, SSAC would face litigation risks and that could damage Taiwan’s reputation, he said.
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