Far Eastern Group (遠東集團) chairman Douglas Hsu (徐旭東) yesterday said the company did not attempt to bribe members of ex-president Chen Shui-bian’s (陳水扁) family to gain full control of a Chinese subsidiary of Pacific Sogo Department Store (太平洋崇光百貨).
The retailer’s statements came after Next Magazine reported that prosecutors are probing Far Eastern after allegations it deposited US$11.5 million in an overseas account held by Chen’s family to help it win management control of Taipei-based Pacific Sogo after a deal closed six years ago.
Prosecutors said the investigation could be part of a broader probe into money laundering by Chen’s family, the report said.
“The report totally smears Far Eastern,” Hsu told a press briefing yesterday. “But I feel relaxed because I did not do anything wrong.”
The report said prosecutors found that Far Eastern had entrusted ABN AMRO Bank with the task of buying a 40-percent share of Sogo’s Chinese unit from Carlyle Group for US$68 million in 2006, but the group paid more, US$79 million, last year.
That could provide a clue linking an unusual transaction to an overseas account held by Chen’s family, the magazine said.
“The transaction with ABN AMRO is purely business and has nothing to do with bribery,” Hsu said. “The price decision was based on a third-party revaluation report by analysts and accountants.”
Far Eastern Group said it did not entrust ABN AMRO with the task of buying Sogo shares. It was Carlyle, who hastened to sell its share, that picked ABN AMRO to sell its holdings, it stressed.
Far Eastern spent US$79 million in acquiring a 40 percent share of Sogo’s Chinese operation from ABN AMRO, which bought the share from Carlyle in 2005 for US$63 million.
Carlyle and Sogo were the major shareholders of Sogo’s Chinese subsidiary. Sogo was restricted from investing more than 40 percent of its net value at the time.
Eyeing the robust Chinese retail market, Far Eastern was willing to pay a premium price for Sogo’s Chinese operation, Hsu said. The Chinese retailing unit had improved its gross margin to 23 percent from 17 percent after ABN AMRO took over, he said.
The transaction was completed in May this year rather than last year as indicated in the report, the group said.
Hsu urged the prosecutors and investigators to find the truth as soon as possible.
Shares of Far Eastern Group’s local subsidiaries including Far Eastern Textile (遠東紡織), Asia Cement (亞洲水泥) and U-Mine Marine (裕民航運) fell by 2.39 percent, 1.98 percent and 0.61 percent, under-performing the benchmark TAIEX index, which gained 1.67 percent yesterday.
Far Eastern Group yesterday filed a slander lawsuit against Next Magazine reporters responsible for the report and Chinese Nationalist Party (KMT) Legislator Chiu Yi (邱毅), New Party Secretary-General Lee Seng-fong (李勝峰), former Sogo chairman Chang Chi-min (章啟明) and others for allegedly spreading false information.
Chen’s office yesterday dismissed the allegation that he received kickbacks from Hsu, saying that he would not rule out taking legal action against his accusers.
The office also rejected previous allegations from KMT lawmaker Chiu Chang (邱彰) that the former president’s son, Chen Chih-chung (陳致中), had two bank accounts in the US and that he had four mansions worth tens of million of dollars registered under his name.
The office labelled the accusations as “ridiculous.”
In a related development, the Supreme Prosecutors’ Office’s Special Investigation Panel (SIP) yesterday summoned former Presidential Office treasurer Chen Cheng-hui (陳鎮慧), former deputy secretary-general Ma Yung-cheng (馬永成) and former presidential aide Kuo Wen-pin (郭文彬) as part of its continued investigation into the alleged money laundering case involving the former first family.
SIP Prosecutor Chu Chao-liang (朱朝亮) said the trio were questioned as witnesses.
ADDITIONAL REPORTING BY KO SHU-LING AND JIMMY CHUANG
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