The Financial Supervisory Com- mission (FSC) yesterday decided to fine United Microelectronics Corp (UMC, 聯電) chairman Robert Tsao (曹興誠) NT$3 million for his company's failure to make public its ties with Chinese chipmaker He Jian Technology (Suzhou) Co (和艦).
Tsao was punished because he is the person responsible for UMC, the world's second-largest contract chipmaker, breaching the Securities and Exchange Law (證券交易法), the commission said.
In a report requested by the Legislative Yuan two weeks ago, the commission said that UMC actually started business contacts with He Jian between the second half of 2000 and the first half of 2001, providing the Chinese company with administrative and managerial advice.
"At that time the two parties had an oral agreement that He Jian would make a return on UMC's assistance, which we think was significant information that needed to be disclosed to shareholders," commission Vice Chairman Lu Daung-yen (
PUNISHMENT
According to Wu Tang-chieh (吳當傑), the head of the Securities and Futures Bureau, the FSC decided to fine Tsao NT$600,000 for his company's past assistance to He Jian as well as impose the maximum fine of NT$2.4 million on him for UMC's failure to disclose its relationship with He Jian on the Taiwan Stock Exchange's Market Observation Post System as required by law.
On March 4, UMC's board gave its approval to the company's connection with He Jian, defining it as significant business strategy and fully authorizing Tsao to take charge of the issue.
However, the company did not announce the board's decision until March 17, far later than the two-day grace period required by the law, Wu said.
"Thus, we decided to fine the person in charge the maximum of NT$2.4 million," Wu said.
CONTROVERSIAL AD
On March 21, in a half-page newspaper ad, Tsao said that UMC would obtain a 15 percent stake in He Jian, valued at more than US$110 million, in exchange for UMC's ``past assistance.''
The commission did not make any judgement yesterday on whether the "15 percent stake" mentioned in the ad was appropriate or not.
UMC's decision to acquire 15 percent of He Jian has not yet received approval from the Ministry of Economic Affairs' Investment Commission, Lu said.
The FSC will demand UMC have professionals make an appraisal of the offer, with the result certified by accountants and approved by the company's board and shareholders in a bid to protect shareholders' rights, he said.
The FSC also declined to comment yesterday on allegations of insider trading and breach of trust at UMC, citing confidentiality while prosecutors are investigating the allegations.
Meanwhile, UMC declined to comment on the FSC's ruling.
"We haven't received the formal notification. We are not clear on what rules we have violated. We disclose company information in compliance with the rules," UMC spokesman Liu Chi-tung (劉啟東) said.
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