The Financial Supervisory Commission (FSC) yesterday meted out penalties to CTBC Financial Holding Co (中信金控) for providing total bail money of NT$100 million (US$3.33 million) to a number of employees, but mostly to a major shareholder, who were charged with embezzlement in June last year.
The commission fined the company NT$10 million and suspended company president Daniel Wu (吳一揆) and chief compliance officer Aaron King (金延華) for six months and three months, respectively.
By providing the bail money without verifying the innocence of the defendants, the company acted against the interests of its stakeholders and violated compliance and internal control rules, the commission said.
More than NT$90 million of the bail money was earmarked for Jeffrey Koo Jr (辜仲諒), a major shareholder and scion of the company’s founders.
NOT ELIGIBLE
Koo, who has been embroiled in a series of investigations and court cases, has distanced himself from the company since 2006 and was not an employee of CTBC Financial when he was released on bail last year, and therefore was not eligible to make use of the company’s resources, the commission said.
The court cases against Koo were the results of actions conducted in his personal capacity and were unrelated to the company, it added.
“While CTBC Financial is a generally well-run company, it has repeatedly faltered in upholding corporate governance standards on matters involving its major shareholder,” FSC Chairman Wellington Koo (顧立雄) told a news conference in Taipei.
This was not the first time that CTBC Financial had provided bail money for the major shareholder, Wellington Koo said, adding that he hopes that the company will not repeat the infraction.
The commission said that the incident reflects shortcomings in the company’s compliance protocols and that as CTBC Financial had numerous run-ins with the law in the past, it should be no stranger to the pitfalls of providing bail money to its employees.
FAILURE
However, instead of letting the incident be handled by its legal and compliance departments, the company failed to uphold corporate governance standards by letting its administrative office report the matter to the board of directors, it said.
Furthermore, the company’s president was found to have provided inadequate information to the board of directors and had misled them into giving their approval to furnish the bail money, the commission said.
The recently appointed commission chairman has said that he aims to improve corporate governance in the financial sector through the separation of ownership and management.
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