Kaohsiung name in NT$350m tax scam

Former Control Yuan member and current Kaohsiung City councilor Chu An-hsiung (朱安雄), and his brother, were formally charged yesterday with economic crimes including evading NT$350 million in taxes and using dummy companies to sell uniform invoices.

The charges were the result of an investigation started after the December 1998 legislative and municipal elections.

The Chu family is one of Kao-hsiung's so-called "three big clans" (三大家族). Chu An-hsiung and his wife, Wu Der-mei (吳德美), a former legislator and former Kaohsiung City councilor, own many businesses, while several other relatives are active in local political circles.

Chu An-hsiung currently heads the Feng An Metal Company (峰安金屬).

Prosecutors allege that in order to allow the company to be listed on the stock market, he set up three dummy companies in other people's names in 1991, and used these three companies as instruments to "buy" goods from Feng An. With the forged transaction records, Chu's business volume could meet the standards for being listed on the local bourse.

With the spare invoices for the false transactions of the three dummy companies, Feng An then allegedly sold these invoices to companies which intended to avoid paying taxes, or produced these invoices to buying parties when selling goods.

The money from this enterprise was also deposited in dummy accounts, according to the indictment.

In addition, the prosecutors said, in 1997 another of Chu's companies, Chen An Steel (振安鋼鐵), was in need of enormous amounts of funds. Chu allegedly collaborated with Chu An-tai (朱安泰), his brother and deputy general manager of Feng An, to forge factory renovation expenditure and appropriated am estimated NT$140 million or more via dummy accounts into Chen An.

The Chu brothers are also charged with purchasing invoices from another nine dummy companies in order to evade taxes. The indictment says that Feng An, Chen An and An Feng Steel (安鋒鋼鐵) have, in total evaded some NT$58.3 million in business taxes and NT$291.6 million in income taxes.

The Chu brothers, however, denied all the charges stemming from the investigation, saying that their employees were responsible for the whole thing.

Since the offences occurred serially, the prosecution has asked the court for harsher sentences if the pair are convicted.

Prosecutors launched an investigation into the case following revelations from a New Party candidate in the 1998 elections for Kaohsiung mayor and city council, that alleged illegal dealings by Chu.

Chu An-hsiung's wife Wu Der-mei is the board chairman of Feng An. She has already been prosecuted by the Taichung's prosecutors' office for two related cases of establishing dummy companies and selling invoices, according to the prosecutors.

Both An Feng Steel and Chu An Steel were involved in repeated multi-million dollar check default scandals in the summer of 1998 which plunged the Pan Asia Bank (泛亞商業銀行) into crisis.