Former minster of finance Paul Chiu (邱正雄) is being investigated on suspicion of mishandling the affairs of a financial institution during a financial crisis it underwent in 1998.
Chiu, who is now chairman of Grand Cathay Securities (
The prosecutors' investigation so far points to Chiu's role in ownership transfer of the Hung Fu Securities Corporation (
At the end of 1998, a number of financial institutions in Taiwan were experiencing financial troubles and the thinking at the time was that if the situation became worse, the entire country could be dragged to its knees under the weight of the regional financial crisis.
In response, the Ministry of Finance had taken emergency measures to save companies that were on the verge of collapse, and Hung Fu was one of them.
Chiu, then minister of finance, negotiated with four banks -- International Commercial Bank of China (中國國際商銀), United World Chinese Commercial Bank (世華銀行), Shanghai Commercial (上海商銀) and the International Bill Finance Corporation (國際票券) -- and managed to talk the banks into buying shares of Hung Fu, at NT$6 per share. However, after the takeover the banks discovered the value of the shares were far lower than they had expected and were actually valued at NT$0.12 per share.
The Taipei District Prosecutors' Office is now investigating whether Chiu had purposely deceived the banks by using false financial reports of Hung Fu at the time when he tried to broker the deal.
Chiu, however, stated yesterday the whole process of the purchase was in accordance with financial regulations and it was then a decision agreed upon by both the Ministry of Finance and the Central Bank. The proposal of buying shares of Hung Fu was approved by the boards of the four banks, he said.
In response to the investigation against the former KMT minister, Lin Feng-cheng (林豐正), secretary-general of the party, endorsed Chiu's integrity yesterday, saying he believes Chiu, who he called a law-abiding civil servant, will ultimately be cleared of the allegations.
But Lin's suggestion that the new DPP government is using the investigation against the KMT is apparently at odds with what law enforcement officials think.
Meng Ling-shih (孟令士), the prosecutor investigating the case, posted an article on the Web site of the Prosecutors' Reform Association following Chiu's release, hinting that his investigation is facing obstructions by political powers.
Meng said he had begun the investigation when the KMT was still in power and is only now finally able to sort out the case after having overcome a number of obstacles. However, he said that as the investigation comes to an end, he feels there is an unknown power trying to obstruct the process.
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