Taipei prosecutors yesterday detained two former top officials of financially strapped Far Eastern Air Transport (FAT, 遠東航空) over their alleged involvement in an embezzlement scandal.
Former FAT chairman Stephen Tsui (崔湧) and former FAT president Philip Chen (陳尚群) are suspected of embezzling NT$2 billion (US$65.6 million) from the airline, throwing the company into a financial crisis, Taipei District Court prosecutors said.
The pair was detained on suspicion of violating the Securities and Exchange Act (證券交易法), breach of trust and forgery, the district court said.
The former president of FAT’s finance division, Robert Wu (吳勇璋), was released on NT$500,000 bail by prosecutors.
Prosecutors yesterday proceeded with their investigation by summoning another four individuals for questioning: FAT chairman Lin Bao-chang (林寶漳); former FAT chairman Mike Lo (樂大信); Shih Chien-hua (施建華), a planning manager at FAT; and Lou Wen-hao (樓文豪), an official of the Taiwan branch of Cambodia’s Angkor Airways Corp (AAC).
While Lo and Lin were released without bail yesterday, the other two were still under questioning as of press time.
Prosecutors said that under Tsui and Chen’s direction, FAT set up several 100 percent-owned subsidiaries, including FAT Capital Management Co. FAT paid FAT Capital Management NT$70 million each year in management fees, but prosecutors said they suspected that Tsui and Chen pocketed the funds.
The pair embezzled at least NT$700 million from FAT Capital Management, prosecutors alleged.
They also said that FAT had leased its planes to its partner, AAC, but the latter did not pay any money to the company and accumulated NT$700 million in debts by the end of last year.
Prosecutors said they suspected that FAT officials purposely let AAC and a couple of travel agencies hold the debts, while receiving bribes from their creditors.
FAT filed for corporate restructuring with the Taipei District Court in February, which temporarily exempts it from paying its debts.
The case is still pending with the district court.
In related news, Civil Aeronautics Administration Director-General Billy Chang (張國政) said yesterday that both Malaysia’s Air Asia and Singapore’s Jetstar Airways had shown an interest in taking over FAT and may decide either today or tomorrow whether to go ahead with the investment.
“Hopefully, the money to pay the company’s bills and employees’ salaries will come in soon,” Chang said.
“Otherwise, the company is sure to collapse,” he said.
Chang said the company had accumulated NT$10.1 billion in debts because of several unsuccessful investments and needed at least NT$100 million to help it through the financial crisis.
He also said he would talk with FAT’s workers and ask them not to take any drastic action in the next two days, as it could hamper any attempt by investors to buy the company.
Four of FAT’s airplanes have been grounded as they were used as collateral for company loans.
Additional reporting by Shelley Shan