Prosecutors poised to raid Rebar Group

Backed by leads which prosecutors categorized as a "major breakthrough," the Taipei District Prosecutors' Office yesterday said it was poised to raid subsidiaries of the Rebar Asia Pacific Group (力霸亞太企業集團) "at any time."

"Probe actions could be launched anytime after investigators gained possession of documents relating to a potential scandal involving the Rebar Group," Taipei District Prosecutors' Office spokesman Lin Jinn-tsun (林錦村) said.

Taipei prosecutors were yesterday collecting and analyzing documents relating to a possible insider trading and embezzlement scandal in the Rebar Group.

"Prosecutors have received a possible lead from the Financial Supervisory Commission [FSC] on a suspected case of illegal trading involving The Chinese Bank and other firms," Lin said, adding that the FSC documents would serve as "a solid base for the investigation."

Lin said that Lead Prosecutor Chuang Cheng (莊正) would head a team of four Taipei prosecutors and investigators in probing the case. They will also investigate whether the group illegally invested in the Chinese market using shareholders' money, Lin added.

The FSC said it found "frequent and substantial amounts of unusual selling activity" involving shares in The Chinese Bank (中華銀行), Chia Hsin Food and Synthetic Fiber Co (嘉新食品化纖) and China Rebar Co (中國力霸) last month. The latter two companies filed for insolvency protection on Thursday.

The regulator said it identified 10 insiders from across the firms who had offloaded 7.8 million Chia Hsin shares and 2 million shares in The Chinese Bank.

The FSC said yesterday that it had asked prosecutors to press charges against China Rebar Co and Chia Hsin Food and Synthetic Fiber Co chairperson Wang Chin Shyh-ying (金世英), as well as company president Wang Lin-mei (王令楣) and Wang Lin-i (王令一) for violating the Securities and Exchange Law (證券交易法).

The two companies' delay in disclosing the board's decision made on Dec. 29 to file for insolvency protection had violated financial regulations, the commission said.

The firms did not reveal the information to investors until Jan. 4.

The commission said it had also found that insiders at Eastern Multimedia Group (東森多媒體), which is also controlled by the Wang family, sold shares before the disclosure, which could be construed as an illegal trading offense.

Eastern Multimedia chairman Gary Wang (王令麟) has said that his firm is a separate company and denied involvement in the scandal.

The FSC said it was investigating whether The Chinese Bank had illegally granted loans to firms belonging to Rebar Group, which reportedly controls up to 136 companies. One member of the group, the Great Chinese Bills Finance Corp (力華票券), is suspected of providing NT$6.8 billion (US$208.2 million) in questionable financing to affiliates.

Rebar Group chairman Wang You-theng (王又曾) and his wife fled to China late last month.

Immigration authorities reported that Wang and his wife, Chin Shyh-ying, flew to Hong Kong on Dec. 30.

Wang is reportedly staying in a deluxe hotel in Shanghai.

Meanwhile, FSC Spokesperson Susan Chang (張秀蓮) said yesterday that "loss of deposits has gradually slowed down and we expect withdrawals of no more than NT$5 billion today."

This would bring the estimated total withdrawals since the run occurred on The Chinese Bank last Friday to some NT$33 billion at press time last night.