The Financial Supervisory Commission (FSC) yesterday continued to defend its decision to mete out heavy punitive measures against CTBC Financial Holding Co (中信金控), which had used company funds to post bail for its employees and a shareholder.
The commission is not out to make an example out of the company, FSC Chairman Wellington Koo (顧立雄) said during a radio interview, adding that the banking industry must meet higher corporate governance standards as it handles the public’s money.
If unchecked, compliance lapses could cause significant systemic risks, Koo said.
“Simply put, the influence of financial companies’ founders cannot override internal control and compliance rules,” he said, referring to the collapse of the 10th Credit Cooperative of Taipei (北市十信) in 1985, which rocked Taiwanese society.
Most of the NT$90 million bail money was earmarked for Jeffrey Koo Jr (辜仲諒), a major shareholder and scion of the company’s founders.
The company’s rules do not allow for its resources to be used for people not on its payroll, Wellington Koo said.
As Jeffrey Koo Jr was involved in court cases related to CTBC Financial’s subsidiary, he was not eligible to use the parent company’s resources, he added.
The company was fined NT$10 million and company president Daniel Wu (吳一揆) and chief compliance officer Aaron King (金延華) were suspended for six months and three months respectively.
Whether the bail money was returned to the company is not the issue, Wellington Koo said.
In a similar vein, Wellington Koo on Monday said that the commission would continue investigations into a questionable loan made by SinoPac Financial Holdings Co (永豐金控), despite announcements by the lender that the loan has been fully repaid.
Judicial authorities would continue to work on the case to uncover the full extent of wrongdoings by the companies involved, and whether the loan has been repaid does not change the fact, he said on the sidelines of a question-and-answer session at the legislature.
SinoPac Financial yesterday announced that J&R Trading Co has repaid US$28.51 million to cover the principal and interest obligations of a loan made by Grand Capital International, a subsidiary of SinoPac Leasing Corp (永豐租賃).
The debt had been repaid ahead of schedule and the company has reaped profits of about NT$1.9 billion (US$63.3 million) from its lending activities to J&R Trading since 2009, SinoPac Financial said in a statement.
The loan has been in regulators’ crosshairs, because the companies failed to uphold rules preventing conflicts of interest in dealings with interested parties, while the borrower did not provide adequate collateral.
In addition, the loan was later discovered to be a measure for former SinoPac Financial chairman Ho Shou-chuan (何壽川) to fund investments in a high-end office building in Shanghai.
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