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FSC’s Chen vows to avoid conflict of interest in case

Financial Supervisory Commission (FSC) Chairman Gordon Chen (陳樹) yesterday said he would avoid conflicts of interest as prosecutors investigate alleged irregularities in the former Democratic Progressive Party government’s financial reforms.

“I myself will avoid attending any meetings that may be in relation to me, or the vice premier will prohibit me from attending such meetings,” Chen told a media briefing.

He failed to clarify if he would voluntarily step aside as the Cabinet’s task force looks into past mergers and acquisitions in the banking sector, in particular the acquisition of Chang Hwa Commercial Bank (彰化銀行) by smaller rival Taishin Financial Holding Co (台新金控) in 2005.

SPECULATION

Former DPP chairman Shih Ming-teh (施明德) earlier insinuated that a tycoon from an unnamed bank funneled NT$2.7 billion (US$85.8 million) in cash to former president Chen Shui-bian (陳水扁).

Local media have speculated the bank in question is Taishin Financial, but the bank has repeatedly rejected allegations of any wrongdoing in the deal.

Since Gordon Chen was then a deputy finance minister and finalized the acquisition on behalf of then finance minister Lin Chuan (林全), doubts were raised as to his role in the acquisition.

“Strictly speaking, I had little involvement in financial reform,” Chen said.

He said he would cooperate closely with prosecutors during their investigations.

INSURANCE

Meanwhile, the commission’s insurance bureau yesterday warned that many more domestic insurers may suffer deteriorating risk-based capital (RBC) because of foreign exchange losses and fluctuations after the NT dollar gained almost 7 percent from NT$32.435 against the US dollar in early January to NT$30.29 in late June.

Insurers are required to maintain an RBC ratio above 200 percent and report to the regulator by the end of this month. Currently, five insurers have been asked to improve their RBC ratio or raise working capital.

Huang Tien-mu (黃天牧), director of the insurance bureau, said that the regulator would allow insurers a grace period to improve their RBC ratio should their financial reports find losses from exchanges “no later than April” when they report their finances for this year.
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