Far Eastern Group’s Sogo deal under new scrutiny

APPEAL FILED::The Ministry of Economic Affairs is appealing against a ruling about the Far Eastern Group’s investment in Sogo Department Stores, which it says is illegitimate

By Helen Ku  /  Staff reporter

Wed, Dec 26, 2012 - Page 14

The Ministry of Economic Affairs (MOEA) yesterday filed an appeal with the Supreme Administrative Court regarding the legitimacy of Far Eastern Group’s (遠東集團) capital infusion into a department store chain, saying it does not agree with the Taipei High Administrative Court’s ruling last month.

The ministry said it held a different stance from the Taipei High Administrative Court in the interpretation of laws, especially about the Company Act (公司法) and its execution.

“As the Supreme Administrative Court has the right to issue a final ruling on the case and clarify views toward specific laws, which will be an important reference for the ministry to deal with similar cases in the future, the ministry therefore decided to file an appeal,” the ministry’s Department of Commerce said in a statement.

On Nov. 29, the Taipei High Administrative Court ruled in favor of the Far Eastern Group’s control of the Pacific Sogo Department Stores Co (太平洋崇光百貨), saying the NT$4 billion (US$137.3 million) capital injection undertaken by Far Eastern Department Stores (遠東百貨), and 14 other affiliates in 2002, to Pacific Distribution Investment Co (太平洋流通) is legitimate.

Far Eastern Group secured control of Pacific Distribution — a holding company for Sogo — in September 2002, which enabled it to run the Sogo department store chain in Taiwan and the Pacific Department Store group in China.

The Taipei High Administrative Court’s ruling last month dismissed both the ministry’s injunction order and other sanctions against the Far Eastern Department Stores made in 2010, when the ministry found forgeries in the minutes of board meetings about the 2002 capital injection.

The ministry decided the move was ineffective and revoked Far Eastern Group’s capital increase registration –– preventing it from exercising ownership rights and holding shareholders’ meetings for Sogo.

Department of Commerce Director-General Reed Yu (游瑞德) said earlier this month the ministry would decide whether to file an appeal with the Supreme Administrative Court.

Earlier this week, the Chang family of Pacific Construction Co (太平洋建設), the former Sogo owner, placed a half-page advertisement in several local newspapers against the Far Eastern Group, demanding that the ministry appeal the case.

In Taipei trading yesterday, Far Eastern Department Stores’ shares closed up 1 percent at NT$30.3, underperforming the benchmark TAIEX, which gained 1.34 percent.

The stock has declined by 15.13 percent this year, but risen by 7.07 percent after the Taipei High Administrative Court’s made its ruling on Nov. 29, Taiwan Stock Exchange data showed.