In the latest twist in a multi-year investment scandal, Democratic Progressive Party (DPP) caucus whip Ker Chien-ming (柯建銘) was yesterday ordered to pay a fine or serve a six-month jail sentence after the Taiwan High Court found him guilty of failing to return a NT$12 million (US$380,000) loan.
The ruling, which upheld an earlier decision by a lower court, said Ker had violated the Business Accounting Act (商業會計法) when he took a NT$12 million loan while serving as general manager of Formosa Telecom.
Ker borrowed the amount in 1997 from a friend, saying he would invest it in a property development subsidiary of the firm.
According to court documents, he later used the check as collateral for a cash loan of the same amount, approved by the then-operator of Formosa Telecom, surnamed Chang (張).
Chang later returned the NT$12 million check when the subsidiary failed to get off the ground, but Ker did not return the money, instead opting to do a stock swap with Lungyuan International, another company where Ker served as general manager.
Prosecutors said that to repay the debt, Ker had set up a short-term repurchase agreement that saw Formosa Telecom pay NT$32 million to buy NT$20 million in shares in the other company. The move led to accounting errors at Lungyuan and a shortfall of NT$12 million for Formosa Telecom.
Central News Agency reported yesterday the money had yet to be recovered.
While Ker did not comment on the latest decision, staff at his legislative office confirmed the opposition party lawmaker would appeal the ruling with the Supreme Court and was still “cautiously optimistic” about the outcome.
The verdict was the latest in a string of scandals involving DPP politicians connected with Formosa Telecom, one of two investors that established Formosa Television Inc.
The privately held company was jointly set up by DPP Legislator and former caucus whip Chai Trong-rong (蔡同榮) and former acting DPP chairperson Chang Chun-hung (張俊宏) between 1996 and 1997. At the time, it received heavy support from pro-independence activists and other opposition party figures.
In October 2007, Chang was sentenced to 11 years in prison for embezzling funds after prosecutors accused him of only using NT$1 billion to fund Formosa Television despite raising NT$3 billion in capital from 15,000 investors in 1996.
The verdict is under appeal.