Outgoing China Development Financial Holding Corp (中華開發金控) chairman Chen Mu-tsai (陳木在) yesterday denied any wrongdoing, saying that corporate policy had been made and executed in accordance with the law.
Chen had stayed mum since the Ministry of Finance announced that Mega Financial Holding Co (兆豐金控) president Lin Tzong-yeong (林宗勇) would take over his post late on Monday night.
"I was qualified for the position and made no mistakes since I took the job in April 2004," Chen said. "I've been devoted to ensuring the company's stability and development ? at the moment, I can say that no one could do better than me in the post."
Speculation about Chen's removal has centered on his role in launching a hostile takeover of Taiwan International Securities Corp (
China Development Financial, the nation's sixth-biggest financial services group by market value, bought up 63 million shares of Taiwan International Securities Corp between Feb. 19 and Mar. 1. According to a company statement, it now holds a 32.08 percent stake.
The buying spree was approved by the company's board of directors and fully complied with the finance ministry's regulations, Chen said.
He said he was unaware that a company subsidiary, China Development Industrial Bank & Partners Investment Holding Corp (開發國際), sold its 2.62 percent stake in Taiwan International Securities to help facilitate the takeover bid, until the deal was completed.
Ministry officials, however, said yesterday that Chen had failed to safeguard the public interest and corporate governance when dealing with the takeover bid.
"The ministry hopes that its government-appointed representatives or company chairmen can act according to high standards ? although there's no legal problems with the acquisition," National Treasury Agency Director-General Liu Teng-cheng (劉燈城) told a press briefing.
Liu said the ministry consulted with the company's other state-assigned directors and one supervisor last week and concluded that Chen's handling of the stock purchases required improvement.
He also stressed that Lin is an experienced banker.
Under Lin's leadership, state-controlled Mega Financial, the nation's second-largest financial group, posted annual net profits exceeding tens of billions of NT dollars over the past three years and has reported the lowest non-performing loan ratio among the nation's banking institutions.
The ministry said it hopes China Development Financial can convene a board meeting by Friday next week to endorse Lin's appointment. However, it's still not clear if Lin will secure the seat, as his appointment has not yet been green-lighted by the board.
China Development president Angelo Koo (辜仲瑩) reportedly dislikes Lin. Koo is from the Chinatrust Group (中信集團), which holds almost a 15 percent stake in China Development Financial.
The government has reportedly increased its stake in China Development Financial from 6 percent to more than 9 percent.
The feud between Koo and Lin reportedly dates to March last year, after Lin, who then represented International Commercial Bank of China (中國商銀), which has three seats on China Development Financial's 21-member board, blocked Koo's proposal to merge KGI Securities Co (中信證券), President Securities Corp (統一證券) and Grand Cathay Securities Corp (大華證券).
Minister of Finance Joseph Lyu (呂桔誠) said that he has telephoned Koo twice to inform him of Lin's appointment, but the company issued a statement saying that it has not received any notice of the change.
Lin's ethics were questioned by Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千) on Tuesday. Sun said that Lin was involved in a financial scandal that is under investigation. Premier Su Tseng-chang (蘇貞昌) said that Lin would immediately be removed from his post if he were indicted.
China Development Financial shares dropped NT$0.6 to close at NT$11.15 on the Taiwan Stock Exchange yesterday.
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