Tue, Jul 28, 2009 - Page 12 News List

Chong Hong chief under probe, shares plummet

By Weiyi Lim and Janet Ong  /  BLOOMBERG

Chong Hong Construction Co (長虹建設) shares plunged by their daily limit in trading yesterday after authorities said its chairman, Lee Wen-tsao (李文造), and his wife were under investigation for alleged breach of trust.

The stock slumped 6.9 percent to NT$66.20, the lowest since June 11, while the benchmark TAIEX advanced 0.8 percent.

The couple are suspected of making illegal gains from buying land and reselling to the company at inflated prices between 2004 and last year, Lin Chin-chun (林錦村), a spokesman for the Taipei District Prosecutors Office, said by telephone yesterday.

Prosecutors raided Lee’s home and other locations, including the company, on Friday.

“The purchases of the land sites were done according to the regulations,” Chong Hong’s spokesman Chen Mao-qing (陳茂慶) said by telephone yesterday, adding the company would cooperate with the investigation.

Lee’s wife was questioned by prosecutors after the raid on Friday and released on NT$1 million (US$30,467) bail, Chen said, adding that Lee was unavailable to speak with prosecutors. Lee and his wife were not available for comment, Chen said.

The developer, which builds luxury apartments, said in a stock exchange filing on Friday that its offices had been searched by prosecutors, without giving details.

“An investigation would result in loss of investor confidence,” said Tseng Fan-jen, an analyst at KGI Securities Co (凱基證券).

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