After weeks of speculation over whether the government would have enough guts to deal with United Microelectronics Corp's (UMC, 聯電) involvement with Chinese semiconductor start-up He Jian Technology Co (Suzhou) (和艦), the Financial Supervisory Commission finally made the first move, fining UMC chairman Robert Tsao (曹興誠) NT$3 million, on the grounds that he had failed to publicly disclose the ties.
Frankly speaking, Tsao can afford the fine, and this so-called "punishment" is hardly going to have a deterrent effect.
If no further action is taken by the government, surely the large number of Taiwanese companies and individuals with illegal investments in China who have been eagerly watching events unfold around UMC will give a sigh of relief.
It is no secret that UMC's ties with He Jian are just the tip of the iceberg. Despite government restrictions on investments in China, far too many illegal investments have been made, in many cases by the "big boys" of Taiwanese industry. Precisely because these "big boys" are so critically important to the nation's economy, many think the government will not dare to go after them. After all, the slightest decline in their stock prices could cause an earthquake on the Taiwan Stock Exchange.
In the case of UMC, the company secretly provided "assistance" -- including, at the very least, technology transfers -- to a Chinese company.
As everyone knows, the semiconductor industry is the pride and joy of Taiwan. The transfer of highly valuable and sensitive technologies to China is no small matter. It could result in China replacing Taiwan as the world's primary semiconductor supplier.
The free provision of such invaluable assets to another company in the absence of necessary disclosures and approvals constitutes, at the very least, a "breach of fiduciary duty" by Tsao and UMC's management. The crime carries a hefty punishment, including prison sentences.
Obviously, for UMC, conceding that it will receive a 15 percent stake in He Jian in exchange for the provision of the so-called "assistance" -- which at least up to this point carries only the said NT$3 million fine -- is better than facing criminal charges for breach of fiduciary duties.
Still, UMC's action should constitute illegal investment in China. President Chen Shui-bian's (
During the past five years of Chen's presidency, the government has seriously slackened off on enforcing regulations on investing in China. If this is allowed to continued, not only will the regulations be treated as mere window dressing, but the government will lose all credibility as their enforcer.
In particular, with both Chinese Nationalist Party (KMT) Chairman Lien Chan (
If no tough action is taken to demonstrate the government's determination in dealing with those who violate existing regulations on cross-strait investments, Beijing will have even more reason to bypass the government and instead deal only with the opposition parties.
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