The investment managers of the Labor Insurance Fund and Labor Pension Fund could come under scrutiny in the wake of reports the insurance fund could go bankrupt by 2016, reports that have led to widespread anger among workers.
Inquiries by the Financial Supervisory Commission (FSC) and the Council of Labor Affairs (CLA) found that the trust fund handling the Labor Insurance Fund, ING Securities Investment and Trust Co (ING SITC, 安泰投信), had made unusual money-losing investments with Labor Insurance Fund and Labor Pension Fund money.
A vice president at ING SITC reportedly caused the Labor Insurance and the Labor Pension funds to collectively lose more than NT$100 million (US$3.4 million) by investing in shares of Ablerex Electronics Co Ltd (盈正豫順電子), a power supply equipment supplier, through dummy accounts.
Huang Tien-mu (黃天牧), director-general of the commission’s Securities and Futures Bureau, said the government has punished 13 securities investment trust companies over their misbehavior in the Ablerex case, including three that are not allowed to raise new money.
The ING SITC vice president and fund managers from two other funds were fired for involvement in illegal activity in connection with the Ablerex investments, while another fund manager was suspended for one year, Huang said.
ING SITC said in a statement that it respects the authority of the council, but regrets the moves taken against it, noting that it had immediately suspended all activities of the vice president involved in the Ablerex case.
However, legislators across party lines took up the issue yesterday, criticizing the FSC, with Democratic Progressive Party (DPP) Legislator Hsu Tain-tsair (許添財) saying the government’s handing over of management of its four major funds — Labor Insurance, Labor Pension, Public Service Pension and Postal Savings — to securities firms was irresponsible and prone to secrecy.
Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕) asked the commission to launch an general inquiry into whether there were similar issues with other outsourced funds managed by other securities firms.
FSC Chairman Chen Yuh-chang (陳裕璋) said the commission was proactive in uncovering the problem, and it would maintain constant vigilance over securities firms.
The commission will make a general inquiry into how securities firms were handling the government’s funds, Chen said.
“I believe this [Ablerex] is a single case, but we will strengthen inspection for these firms,” Chen said.
Council of Labor Affairs Minister Pan Shih-wei (潘世偉) said the council would talk with ING SITC, but if it did not receive a “positive response” it would sue the firm.
Speaking at the meeting of the legislature’s Social Welfare and Environmental Hygiene Committee, Pan said although ING SITC was gradually returning the money that the firm’s mishandling had cost the Labor Insurance Fund, talks on compensation for the Labor Pension Fund had yet to be begin.
Labor Pension Fund Supervisory Committee chairperson Huang Chao-hsi (黃肇熙) told DPP Legislator Liu Chien-kuo (劉建國) that the council would do its best to fight for the rights of workers, but everything depended on whether the courts found ING SITC’s handling of the two funds’ accounts were illegal.
The committee had found discrepancies in ING SITC’s investments as early as October 2010 and had reported the finding to the FSC, which had fined ING NT$240,000 for filing unclear investment reports.