The Ministry of Finance yesterday filed an appeal to contest a High Court ruling over the Chang Hwa Commercial Bank (CHB, 彰銀) management rights dispute, saying the ruling is legally unsavory and fails to recognize the testimony of crucial witnesses.
The move has made reconciliation between the ministry and Taishin Financial Holding Co (台新金) unlikely ahead of CHB’s board elections on Friday.
The court’s argument over the existence of a contractual relationship between the ministry and Taishin Financial ran counter to facts and a legislative resolution that bars state-controlled shares from backing non-government stakes, Deputy Minister of Finance Su Jain-rong (蘇建榮) said.
The ministry has faithfully complied with the resolution and has never supported Taishin Financial in CHB board member elections, Su said.
“All important decisions about state-run financial institutions are subjected to the legislature’s oversight, but the lawmaking body has never reviewed such an agreement, indicating there was no agreement in the first place,” Su told a media briefing.
The High Court on May 17 ruled in favor of Taishin Financial, saying the ministry should continue to help the conglomerate win a majority of CHB board seats, as long as Taishin Financial remains the largest shareholder, in keeping with an agreement made in 2005.
Taishin Financial 12 years ago bought a 22.5 percent stake in CHB for NT$36.5 billion (US$1.2 billion at the current exchange rate) with a view to acquiring it and allegedly with tacit understanding from the ministry.
National Treasury Administration Director-General Frank Juan (阮清華) said the ministry yielded management rights in CHB to Taishin Financial in 2008 and 2011, because the government controlled fewer shares, compared with the bank-focused group.
“Things have changed over the years. Now state-run financial institutions and funds own more than 30 percent in CHB,” Juan said.
Juan said he regrets that the court failed to recognize the testimony of important witnesses, such as central bank Governor Perng Fai-nan (彭淮南) and former deputy minister of finance Liu Teng-cheng (劉燈城), who took part in the policymaking process in 2005.
Both Perng and Liu testified that the contractual relationship expired with the maturity of the special shares Taishin Financial acquired from CHB to help resolve the lender’s financial woes, Juan said.
CHB is to elect six board directors and three independent directors on Saturday.
Shareholders overwhelmingly rallied behind government-backed candidates in the 2014 board election, prompting Taishin Financial to write off huge asset losses and file lawsuits against the ministry.
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