Sat, Jun 24, 2006 - Page 1 News List

Reversal leaves Mega Financial in state's hands

By Jackie Lin and Amber Chung  /  STAFF REPORTERS

The saga over the control of Mega Financial Holding Co took an unexpected turn yesterday, when two private directors tendered their resignations, thereby preserving the government's control of the nation's third-largest financial services provider just hours after the government had lost its majority in a board election.

The government now holds seven seats on the board of Mega Financial, while private shareholders hold only six, down from the eight they won in an election yesterday, Liu Teng-cheng (劉燈城), director general of the Ministry of Finance's National Treasury Agency, said yesterday evening.

Private director Chien Hung-wen (簡鴻文), who is chairman of Barits International Securities Co, and independent director Wu Rong-i (吳榮義), who is a former vice premier and former president of the Taiwan Institute of Economic Research (TIER), offered to resign immediately after the board meeting yesterday evening, Liu said.

Liu, who is in charge of the ministry's Government Shareholding Management Unit, was speaking at a press conference held at the Executive Yuan, accompanied by Vice Premier Tsai Ing-wen (蔡英文), Minister of Finance Joseph Lyu (呂桔誠) and Cabinet Spokesman Cheng Wen-tsang (鄭文燦).

Although Wu was recommended by foreign investors as an independent director, he has been deemed a covert private director considering his close ties with Chinatrust Financial Holding Co, which holds a 15.63 percent stake in Mega Financial.

Before the press conference, the ministry appeared set to lose its majority control of Mega Financial, which has NT$2.13 trillion (US$65.1 billion) in assets, in yesterday's board reshuffle.

The expected loss of government control of Mega Financial has sparked searing criticism about the ministry's inability to defend its power.

Before the resignations yesterday, the government, which controlled a 22.78 percent stake in Mega Financial, won just seven out of 15 board seats -- one less than it held before -- and three out of five supervisor positions at the company's shareholders meeting yesterday.

Smaller rival Chinatrust Financial grabbed four board seats and one supervisor spot. The remainder went to Wu, Chien, sports shoemaker Pou Chen Corp and Mega Financial's current chairman Cheng Shen-chih (鄭深池) who also won the most ballots.

Cheng Shen-chih, a private shareholder, was later re-elected as the financial service provider's chairman for another three years, although none of the government's seven representatives voted for him.

Mckinney Tsai (蔡友才), the government-appointed director and acting president of Mega Financial, secured 100 percent support to serve as the company's president, Liu said.

Liu emphasized that Mega Financial will not hold a board re-election as regulations stipulate that would only be required if the more than half of the board seats were vacated.

The 13-seat board will be responsible for Mega Financial's operations for the next three years, he added.

"The Cabinet is not completely satisfied with the outcome but it has met our goal," said vice premier Tsai Ing-wen.

In an unusually harsh tone, Tsai urged chairman Cheng Shen-chih, who is said to be a good friend of President Chen Shui-bian (陳水扁), to stand on the government's side in Mega Financial operations and pursue the maximum interests of overall shareholders.

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