The Ministry of Finance is investigating mergers and acquisitions by financial firms including Chang Hwa Commercial Bank Ltd (彰銀) and Mega Financial Holding Co (兆豐金控) carried out under former president Chen Shui-bian (陳水扁), who is the subject of a corruption probe.
The ministry is looking for possible irregularities in connection with Taishin Financial Holdings Co’s (台新金) acquisition of Chang Hwa and Chinatrust Financial Holding Co’s (中信金) purchase of a stake in Mega, Su Le-ming (蘇樂明), director-general at the National Treasury Agency, said yesterday.
The investigation comes amid reports of possible impropriety carried out under financial reforms engineered by Chen, whose second term ended on May 20. Prosecutors are examining those deals for possible links to Chen and his family.
Taishin, whose shareholders include Newbridge Capital LLC and George Soros, fell to a record low yesterday after reports in newspapers including the Chinese-language Commercial Times and Economic Daily News quoted former Democratic Progressive Party chairman Shih Ming-teh (施明德) as saying that its bid for Chang Hwa may have been illegal and that it had donated NT$2.7 billion (US$86 million) to Chen.
Taishin ran half-page advertisements in local newspapers yesterday denying the allegations. Chang Hwa also denied wrongdoing.
Taishin won a bid in 2005 to buy a 22.5 percent stake in state-run Chang Hwa for NT$36.5 billion. The offer, at NT$26.12 per share, was higher than the share price of NT$17.98 and bids by competitors, including Temasek Holdings Pte.
“We held an open and fair auction and it was an international bid with more than one company participating,” Chang Hwa spokesman James Shih (施建安) said by telephone yesterday. “We welcome the government’s probe.”
Taishin shares fell 3.5 percent to close at NT$9.61, the lowest since the company listed on Feb. 18, 2002. Chang Hwa rose 3 percent.
The ministry, which oversees government stakes in financial services companies, will also probe a deal involving China Development Financial Holding Corp’s (開發金) acquisition of Taiwan International Securities Corp (金鼎證券), Su said.
“We did everything in accordance with the law,” Chinatrust chief financial officer Hsu Miao-ching (�?R) said by telephone.
Simon Dzeng (曾垂紀), a spokesman at Mega Financial, declined to comment, while Sherie Chiu (邱德馨), chief financial officer at China Development, could not be reached for comment.
The mergers were carried out during the so-called “Second Financial Reform,” launched by Chen in 2004 to halve the number of financial holding companies in Taiwan within two years.
Chen, who is being investigated on allegations of corruption and money laundering, has admitted to underdeclaring campaign funds and disclosed that his wife, Wu Shu-jen (吳淑珍), had wired election funds overseas earlier this year without his knowledge.
Mega Financial shares fell 0.5 percent, while Chinatrust shares rose 1.3 percent and China Development gained 1.5 percent.
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