The Investment Commission will suspend the review of an application to acquire cable and Internet services provider China Network Systems Co (CNS, 中嘉網路) until all disputes surrounding the case are settled, Vice Minister of Economic Affairs Shen Jong-chin (沈榮津) said yesterday.
Responding to concerns voiced by the Democratic Progressive Party (DPP) and New Power Party (NPP) caucuses, Shen said: “The head of the Investment Commission will take into consideration the opinions of the new legislature and the public, and the task force will clarify all the controversies first.”
“The application will absolutely not be forwarded to the commission [for review] before all the controversies are cleared,” he told a news conference held by the DPP caucus.
Photo: CNA
Last month, the National Communications Commission (NCC) approved an application by North Haven Private Equity Asia (NHPEA), a subsidiary of Morgan Stanley Private Equity Asia, to acquire CNS, on the condition that it fulfills 20 commitments that it had made to the NCC to secure approval.
The case was then referred to the Investment Commission, which is the last checkpoint before the acquisition is given the green light.
Controversy over the acquisition lies in the role of Far Eastone Telecommunications Co (FET, 遠傳電信), whose shareholders include the government’s four major investment funds.
Although the NHPEA is the company that is seeking to acquire CNS, FET spent NT$17.12 billion (US$509.4 million) buying corporate bonds issued by the NHPEA last year as a way to invest in CNS and in what critics said was a bid to circumvent laws banning the government, political parties and the military from directly investing in media outlets.
“To secure 60 percent of CNS shares, FET has played many tricks, including creating a dummy company through Morgan Stanley, with most of the funding collected locally,” DPP Legislator Wang Ting-yu (王定宇) said.
“The government should think about whether it would like to allow a corporation to obtain a multiple network service operator that would have an impact on Taiwan’s public opinion,” he said.
DPP Legislator Chen Ou-po (陳歐珀) said that FET is obviously trying to dodge relevant regulations, and urged the Investment Commission to not forget the objective of the law banning political parties, government and the military from intervening in media organizations.
Expressing similar concerns, NPP lawmakers, at a separate press conference, called on Taipei and Kaohsiung city government representatives on the Investment Commission to put the case on hold, allowing the incoming administration of president-elect Tsai Ing-wen (蔡英文) to reverse the NCC’s decision.
“Do not restrict yourselves in reviewing the case just because it has been passed by the NCC,” NPP Legislator Huang Kuo-chang (黃國昌) said. “If foreign investment is trying to help a corporation get around the law, the Investment Commission should intercept the deal.”
He castigated the NCC’s decision to approve the investment after receiving 20 commitments from the firm, questioning its will to enforce those promises.
“The burdens attached by the NCC are a joke and they will not be implemented because no one has any idea what actions the NCC will take,” he said. “In the past, when has there been a case where burdens were not fulfilled and the NCC withdrew investment approval?”
Several university professors also said the commitments were unenforceable.
National Taiwan University professor Lin Tsung-nan (林宗男) criticized the NCC for allowing CNS to establish its own committee to report on compliance.
“This is like a teacher giving a test and allowing students to take it home and report their own grade,” he said.
National Taipei University of Technology professor Chiang Ya-chi (江雅綺) said that while the NCC had demanded that FET promise not to appoint a representative to CNS’ board of directors, it would be difficult to check for compliance because the firm could back former employees or other candidates who have indirect ties to it.
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