Farglory Land Development Co (遠雄建設) yesterday said that vice chairman Frank Chao (趙文嘉) — the eldest son of chairman Chao Teng-hsiung (趙藤雄) — would take over temporarily as chairman after his father was held incommunicado for alleged involvement in a bribery scandal.
The decision came as the flagship unit of Farglory Group (遠雄集團) is struggling to battle its worst crisis since it was founded in 1978 after Chao Teng-hsiung, Taiwan’s 40th-richest man with US$1.7 billion in assets according to Forbes, was detained by prosecutors over the weekend amid a bribery scandal in connection with a development project in Taoyuan County.
“The move is intended to stabilize the company, which will press ahead with existing construction work, but will stop plans to join government-linked projects,” Farglory Land vice president Tsai Chung-I (蔡宗易) said by telephone.
The company will also accept the Taoyuan County Government’s decision to scrap the sale of three plots of land Farglory won for NT$1.3 billion (US$43.26 million) in an auction in April to develop affordable housing, Tsai said.
The group’s business units include Farglory Life Insurance Co (遠雄人壽), Farglory Hotel (遠雄悅來飯店), Farglory Free Trade Zone (遠雄自由貿易港區), Taiwan Solar Energy Corp (元晶太陽能) and Golden Biotechnology Corp (國鼎生物科技).
However, the allegation that Chao Teng-hsiung had bribed former Taoyuan County deputy commissioner Yeh Shi-wen (葉世文) with NT$16 million to rig the bid has damaged his self-made man image, a property broker said, asking not to be named.
Another broker said, also on condition of anonymity, that Farglory Land has been known for bold moves to expand its business ventures over the years.
The company declined to comment on the legal developments, but it is appealing the senior Chao’s detention.
The ill-fated venture in Taoyuan’s Bade City (八德), which previously allowed Farglory to develop NT$7 billion of new housings in 2016, would not affect the company’s financial showing this year or next year, Tsai said.
The amount involved is modest, compared with the company’s estimated revenue of at least NT$60 billion this year, Tsai said.
Market watchers disagreed, predicting that Farglory Land shares would nose-dive today when the stock market reopens after the Dragon Boat Festival.
“Farglory shares are very likely to plunge by their daily 7 percent limit tomorrow [Tuesday] amid a panic sell-off as the bribery scandal unfolds,” Masterlink Securities Investment Advisory Corp (元富投顧) president Liu Kun-hsi (劉坤錫) said.
The downturn may persist if the scandal escalates, Liu said.
State-run Hua Nan Securities Co (華南永昌投顧) chairman David Chu (儲祥生) echoed the grim sentiments, saying the property sector already has to cope with lackluster transactions this year due to government efforts to curb housing prices.
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