Tue, Dec 31, 2002 - Page 1 News List

Former officials face fines

UNFORGIVING Hsu Li-teh, the former vice premier, is one of the officials involved in companies that invested illegally in China, even though the funds were withdrawn

By Kevin Chen  /  STAFF REPORTER

Two venture capital companies managed by former top-ranking government officials are suspected of illegally investing in China and are expected to be fined up to NT$5 million each, officials at the Ministry of Economic Affairs said yesterday.

"The government has decided to come down hard on Taiwanese companies that have invested illegally in China," Minister of Economic Affairs Lin Yi-fu (林義夫) said yesterday at a year-end press conference.

One of the companies on the ministry's list is Prudence Capital Co (誠宇投創), chaired by a former vice premier under Lee Teng-hui (李登輝), Hsu Li-teh (徐立德). Hsu also served as minister of economic affairs under former president Chiang Ching-kuo (蔣經國).

The company invested US$80 million in Shanghai-based Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路), the Cabinet said in a statement on Friday.

Prudence, a Taiwan-based venture capital company funded in part by the government's Development Fund (開發基金), agreed in May to withdraw its investment in Semiconductor Manufacturing.

"Though the company [Prudence] agreed to withdraw its investment, its practice is still considered illegal given current laws and should be punished," said Huang Chin-tan (黃慶堂), executive secretary of the Investment Commission.

According to regulations, Cabinet funds cannot be invested directly or indirectly in China through venture capital companies, Huang said.

Another company on the list is Global Strategic Investment Fund (全球策略投資管理). The company was established in March last year by Yang Shih-chien (楊世緘), vice minister of economic affairs from 1992 to 1993.

Huang said Global Strategic, which is invested in part by the ministry's Yao Hua Glass Co (耀華玻璃), is also subject to fines up to NT$5 million -- although it promised in October to withdraw its investment in Semiconductor Manufacturing.

"We have submitted to the Executive Yuan a list of Taiwanese companies that have illegally invested in China," Huang said, without naming the companies suspected of breaking the law.

"We will also severely punish those investors," he added.

The ministry required Taiwanese companies to register their China-bound investments with the government. A total of 23,806 China-bound investment items worth of US$9.1 billion had been registered as of Dec. 26, the ministry said.

Today is the last day for registration and the government is formulating legislation to tighten China investment rules.

Under that plan, "companies would have to apply to the government for approval if they plan to invest in China, or they will face punishments ranging from NT$50,000 to NT$25 million," Huang said.

Under the current rules, companies suspected of breaking the law are subject to fines ranging between NT$1 million and NT$5 million.

Last Friday, the government said it would adopt stricter measures to prevent companies from illegally transferring capital to China while leaving debts unsettled at home.

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