Thu, Oct 19, 2006 - Page 1 News List

Agents seize documents in raid on Chinatrust's offices

INVESTMENT PROBE Ministry of Justice investigators also summoned Chinatrust Financial Holding Co's chief legal adviser and vice general manager for questioning

By Rich Chang and Amber Chung  /  STAFF REPORTERS

Investigators yesterday raided the head office of Chinatrust Financial Holding Co in Taipei and seized a number of documents relating to Chinatrust's involvement in a controversial investment in Mega Financial Holding Co.

Taipei Prosecutor Tseng Yi-sheng (曾益盛) yesterday morning led agents from the Ministry of Justice's Investigation Bureau (MJIB) in a two-hour raid of Chinatrust's headquarters in Taipei.

The MJIB also summoned Chinatrust's chief legal adviser Deng Yan-dun (鄧彥敦) and vice general manager Lin Hsiang-hsi (林祥曦) for questioning.

At press time last night, they were still being questioned by MJIB agents.

"To facilitate the investigation, investigators decided to raid Chinatrust's offices and subpoena its top officials," Taipei District Prosecutors' Office Spokesman Lin Jinn-tsun (林錦村) said.

Prosecutors are also expected to subpoena Jeffrey Koo Jr (辜仲諒), who is living abroad, if he returns to the country.

Koo Jr stepped down on July 21 as chairman and director of the board of Chinatrust Commercial Bank over the controversial Mega Financial deal.

Prosecutors said the investigation might lead to charges including breach of trust, illegal trading and violation of the Banking Law (銀行法).

The nation's financial regulator, the Financial Supervisory Commission (FSC), says that Chinatrust had invested in Mega Financial via structured notes transacted through its Hong Kong branch, but later transferred those notes to another Hong Kong-based company, Red Fire Development Ltd.

The Hong Kong firm later cashed in the structured notes, making a profit of more than US$31 million. The money was returned to Chinatrust after intervention by the FSC.

Prosecutors suspect that the Hong Kong firm is a front company controlled by the Koo family and are endeavoring to determine whether anyone has profited illegally from the Mega Financial deal.

Chinatrust Financial chairman Jeffrey Koo Sr (辜濂松) said yesterday that the raid came as a big shock to him.

He said that he was very worried about his eldest son, Jeffrey Koo Jr, being drawn into the investigation.

"I believe our actions [in conducting the investment] were honorable and honest, and we will fully cooperate with investigations," he said. "I believe that the impartiality of the judiciary and the results [of the probe] will help clear our names."

Koo Sr returned to Taiwan yesterday morning from the US. He declined to comment on the relationship between Chinatrust Financial and Red Fire, which is registered in the Virgin Islands.

also see story:

NewsMaker: Jeffrey Koo Jr, the `handsome banker' who jeopardized the family business

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