Democratic Progressive Party (DPP) legislators yesterday raised questions about a possible conflict of interest in reviewing the Nan Shan Life Insurance Co (南山人壽) deal given the friendship between the buyer and the head of the Financial Supervisory Commission.
The allegations came as American Insurance Group (AIG), the parent company of Nan Shan, moves to finalize a deal with Ruentex Group chairman Samuel Yin (尹衍樑) that will see the sale of the country’s largest insurance carrier by book value.
The deal is still subject to approval from the commission, which rejected an earlier sale in August, citing concerns about the long-term commitment and fund-raising capability of the buyer, China Strategic Holdings Ltd (中策集團) and Primus Financial Holdings Ltd (博智金融), part of a Hong Kong consortium.
DPP legislators said there were serious concerns over the review, as Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) once approved a large loan to Yin, and the two have been close friends since they were students.
“Chen should back out of the substantive review to reassure the public and increase public confidence in the deal,” DPP Legislator Su Chen-ching (蘇震清) said. “He should avoid the conflict of interest.”
In 2009, Chen, who at the time was chairman of First Commercial Bank (第一銀行), led a NT$4.91 billion (US$165.5 million) syndicated loan to a member of the Ruentex Group — Ruentex Development Co (潤泰新).
The loan was far higher than the original NT$2.61 billion that Ruentex requested to finance an urban regeneration project in Taipei.
First Bank described the group as having a “beautiful business” despite its substantial losses, Su said.
“Under those circumstances, why would First Bank play a primary role in the loan, if not for Chen and Yin’s special relationship?” Su asked. “He was basically speaking with his eyes wide shut.”
In January, DPP Legislator Pan Men-an (潘孟安) said senior government officials had been working behind the scenes and brokered deals under the table to ensure the sale to Yin, who Pan said had received “high-level endorsement.”
The lawmakers pointed to the businessman’s history of controversial business practices, including alleged associations with arms dealers and land disputes, as reason behind the opposition to the sale.
In a statement yesterday, the commission said the loan given in 2009 was based on “normal business practice” and denied it had any connection with the pending review of the Nan Shan case.
“The two men were not classmates and graduated at different times,” the statement said.
The sale would be handled according to the law and would include discussion from commission members, it said.
“The legal review will be based on the grounds of fairness, professionalism, and efficiency ... as well as the five principles of insurance law,” the statement said.
First Bank also issued a statement yesterday saying that the loan was made based on Ruentex’s sound credit standing and that the loan has yet to be appropriated pending a construction license.
The Taipei City Government is expected to grant the license later this month and the construction will take two-and-a-half years, the bank said.
ADDITIONAL REPORTING BY CRYSTAL HSU
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