Taipei District Prosecutors yesterday indicted Taipei City councilor and head of the Hung Fu (宏福) conglomerate Chen Cheng-chung (陳政忠), alleging he stole up to NT$6 billion from the business group.
The indictment recommended that the three-term KMT city councilor be sentenced to 15 years in jail. The charges against Chen include breach of trust, fraud, embezzlement and breach of the Securities Exchange Law.
Chen held a press conference at the City Council yesterday to say he was innocent. Chen said he was not in charge of the day-to-day operations of Hung Fu, and claimed that the conglomerate's problems were due to the economic downturn.
A serious financial crisis at Hung Fu came to light in 1998 and prosecutors began to probe into suspicious dealings concerning the rapidly expanding conglomerate.
In the indictment, prosecutors listed seven categories of offense. First, it says, Chen presided over false land transactions and inflated land prices to squeeze money out of the listed Hung Fu Construction Co.
According to the indictment, in 1992 Chen bought a plot of land in Shulin City (
The land was then sold to the Hung Fu Construction Co for more than NT$1.06 billion through a dummy company set up in his brother's name.
In 1997, the indictment goes on, Chen misappropriated almost NT$1.26 billion borrowed by Hung Fu from banks.
He also produced a false capital-increase plan for Hung Fu Construction in order to cheat investors into buying the company's stock on the erroneous basis that the company would generate profits in the future. The indictment goes on to say that Chen later departed from the plans he had shown to investors.
The prosecutors also said that Chen used hundreds of dummy accounts to make irregular stock transactions to manipulate the price of Hung Fu's stock.
Most of Chen's illicit efforts were aimed at filling the financial holes in Hung Fu.
At his press conference, Chen claimed that the indictment could be politically motivated. "There might have been some pressure [brought to bear] on prosecutors, [as] the election is drawing near," he said. He did not offer any evidence of such pressure, however.
Chen is also a former owner of the Independence Evening Post (自立晚報). He bought the newspaper in 1995 and sold it in 1999.
Eleven other people were indicted along with Chen, including his brother, brother-in-law and several officials of the group. The officials include the former head of the Ministry of the Interior's Construction and Planning Administration, Pan Li-men (
The prosecutors requested that Pan receive a five-year sentence. Pan also claimed that he was innocent.
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