The New Power Party (NPP) yesterday said it would promote legislation to penalize Chinese nationals and companies that have invested in Taiwan without permission by disguising the source of their funds.
Under current law, Chinese nationals and companies must obtain government permission before investing in Taiwan, except for certain industries where Chinese investment is completely banned, NPP Executive Chairman Huang Kuo-chang (黃國昌) told a news conference at the party’s caucus office in Taipei.
However, Chinese investors can dodge the review system by disguising the source of the funds, such as making the investment through another foreign company they have control over, he said.
Photo: Liu Hsin-de, Taipei Times
The past few years have seen many cases in which unapproved Chinese investors manipulated the Taiwanese securities market and caused great losses to investors, he said.
Examples of such cases include the XPEC Entertainment Inc fraud that closed in February, as well as an alleged manipulation of Tatung Co’s shares by Taiwanese and Chinese investors which prosecutors uncovered in August, he said.
In the XPEC case, one of the nation’s most notorious acquisition fraud cases, a number of executives and employees were found to have manipulated a planned takeover bid by a Japanese firm allegedly controlled by a Chinese entrepreneur, causing investors to lose more than NT$4.6 billion (US$149 million).
Many similar cases indicate “a clear, recurring pattern” in which unapproved Chinese investors dodge the review system by concealing the source of their funds, yet such practice is not punishable by law, he said.
The party has therefore proposed a draft amendment to the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (臺灣地區與大陸地區人民關係條例), which would make any investment by Chinese nationals or companies made in a manner that disguises its source of funding so as to dodge the review system punishable by up to five years in prison and a fine of up to NT$25 million, he said.
Unapproved Chinese investments with disguised funding sources are a pressing issue for the nation and the bill aims to fix the issue, NPP caucus convener Hsu Yung-ming (徐永明) said, adding that he hopes legislators across party lines would support the bill.
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