Embarrassed government officials yesterday pulled their money out of a technology fund after learning the firm was invested in the restricted semiconductor industry in China.
Prudence Capital Co (誠宇創投), a Taiwan-based venture capital company, will withdraw its illegal China-bound investment in Shanghai-based Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路) by May, the Cabinet said in a press statement yesterday.
"Prudence has agreed to withdraw the US$2 million investment in SMIC -- which is part of the fund raised from the government's Development Fund (開發基金) under the Executive Yuan, before early May," the fund's committee said in a statement yesterday.
Ironically, the head of the fund's committee Lin Hsin-yi (林信義), who is also Vice Premier, said last week that Cabinet funds would not be allowed to invest directly or indirectly in China through venture capital companies.
"China lacks the high-technology edge to make a proper investment ? and, therefore, few venture capital companies in the world will actually put down investments there," Lin said.
According to the statement, the Cabinet's Development Fund has invested NT$50 million (US$1.47 million) in Prudence, which amounts to 2.5 percent of its NT$200 million in capital.
It has also obtained one seat on the company's 12-seat board. Although Prudence re-invested US$2 million in SMIC through a third country, only US$1.5 million was actually remitted to the chipmaker.
Prudence's reshuffled board members, who were then allegedly "unfamiliar" with the government's policy, made the decision to invest last September, the statement said.
The Cabinet's representative in Prudence's board, however, failed to veto the investment decision at that time, it said.
The Cabinet only of learned of the investment when government investigators recently found that Prudence was on the black list of companies that have jumped the gun and illegally invested in China -- directly or indirectly -- without government consent.
Headed by former vice premier Hsu Li-teh (
Staff of the venture capital firm also refused to reveal its full English company name to the media, saying "not during such a controversial time."
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