Taipei District Prosecutors’ Office yesterday dropped the charges against three XPEC Entertainment independent directors in a financial fraud case.
The office dropped the charges against media personality Sisy Chen (陳文茜), former minister of economic affairs Yin Chi-ming (尹啟銘) and former Taipei deputy mayor Lee Yong-ping (李永萍).
Evidence showed that XPEC chairman Aaron Hsu (許金龍) acted alone in stock manipulation and illegal transfer of assets for personal gain, causing a collective loss of NT$4.86 billion (US$160.76 million at the current exchange rate) for investors, Taipei Deputy Chief Prosecutor Chou Shih-yu (周士榆) said.
Prosecutors decided not to indict the three independent directors due to insufficient evidence on their involvement, Chou said.
The announcement was not welcomed by individual investors of XPEC who bore the brunt of the losses.
“I am very disappointed and feel very bad about the decision,” said a woman who gave her name only as Joy, who had previously headed the self-help association organized by victims of the fraud.
Financial records showed there are more than 200,000 individual investors who had bought XPEC shares.
“The three independent directors received millions of dollars to cover their expenses for performing their duty. However, when a financial fraud happens, why do these people not need to bear any responsibility?” Joy asked.
“What has become of the system of appointing independent directors to companies?” she said. “Independent directors are supposed to oversee the company’s finances, and prevent opaque and fraudulent practices.”
“However, company chairman Aaron Hsu was able to cover it up and supposedly carried out the whole thing all by himself. So what was the use of these independent directors? I was left speechless by the prosecutors’ decision to drop the charges,” she added.
Prosecutors earlier this year charged Hsu with violations of the Securities Exchange Act (證券交易法) and the Business Entity Accounting Act (商業會計法), and sought the maximum 30-year jail term for him.
Evidence showed that Hsu made illegal arrangements, undermined the company’s management, deceived the directors and executives, and colluded with outside firms to manipulate the XPEC stock price, prosecutors said.
They said Hsu colluded with two foreign firms, Zhejiang Century Huatong Group Co of China and Bai Chi Gan Tou Digital Entertainment Co of Japan to manipulate XPEC’s stock price through speculative and promotional news.
“Hsu used a shell company registered overseas to divert about NT$4 billion of illegal profits, then used the money to manipulate Taiwan’s stock market to make more money. His actions undermined the business interests of XPEC, created havoc on the stock market and resulted in significant financial losses for investors,” Hsu’s indictment said in January.
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