New Power Party (NPP) Executive Chairman Huang Kuo-chang (黃國昌) yesterday accused the Investment Commission of dereliction of duty, saying it failed to conduct a stringent review of Bai Chi Gan Tou Digital Entertainment Co’s (百尺竿頭) funding sources.
The commission’s review was inadequate and cursory, and involved little more than processing administrative paperwork, Huang said at a meeting if the Legislative Yuan’s Finance Committee.
Huang said the commission had failed to verify funding confirmation filings by the suitor of XPEC Entertainment Inc (樂陞科技), as commission officials later acknowledged that they were not aware that US$230 million of the funds listed in Bai Chi’s plan would come from Hong Kong-based investment subsidiaries backed by Chinese money.
“These lapses have severely affected the nation’s market mechanisms, and will continue to have a profound impact on the viability of Taiwan in the eyes of foreign investors in the absence of consequences for submitting incomplete and false filings,” Huang said.
The Finance Committee yesterday held a question-and-answer session with regulators who gave the green light to Bai Chi’s NT$4.86 billion (US$155 million at current exchange rates) tender offer to acquire a 25.71 percent stake in XPEC that later collapsed, leaving investors with heavy losses after the video game developer’s shares tanked.
While the Securities and Futures Investors Protection Center has begun to take legal action against Bai Chi, lawmakers demanded that the Financial Supervisory Commission (FSC) and the Investment Commission shoulder some of the reparations to affected investors.
Lawmakers also listed CTBC Bank Co (中國信託銀行), which served as the depository bank in the acquisition, as liable to damages for investors’ losses.
FRAUD
Huang said he suspected that XPEC planned to default on its loans and obligations in Taiwan, as the company had wired NT$5.3 billion to China earlier this year for its acquisition of a stake in Chinese mobile apps platform Xiamen ETombo Technology Ltd (廈門同步網路).
FSC Chairman Ding Kung-wha (丁克華) said the case has been classified as financial fraud involving market manipulation and insider trading, adding that the commission has handed its findings to prosecutors.
The Finance Committee also held a two-hour closed-door meeting with officials of state-run Mega International Commercial Bank (兆豐銀行) of the bank and regulators regarding contravention of US money laundering rules by a New York branch, which was handed a hefty US$180 million fine by the New York State Department of Financial Services (DFS).
Following a review of confidential data released by the FSC for lawmakers, Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗), a former FSC chairman, said that none of the 174 wire transactions or 76 accounts in question had ties or originated from Taiwan, and none of the beneficiaries had Chinese-language names.
Tseng said these findings disprove allegations that the bank had been helping the KMT in whisking away its “ill-gotten” assets abroad.
However, Huang said that yesterday’s discussions were limited to suspicious transactions between 2012 and 2014, and that ongoing investigations should go further back to 2010, when Mega Bank was penalized by Panamanian financial regulators, for breaking money laundering rules.
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