In addition to The Chinese Bank of the Rebar Group, eight other banks have come under investigation since October last year, according to Tseng Ming-tsung who is in charge of the investigation of banking operations at the FSC.

But Tseng declined to reveal the names of the banks and executives that have been referred to prosecutors and investigators, according to local press reports. He said The Chinese Bank of the Rebar Group was the only bank having violated the regulations. The special inspection of the banks’ operations was focused mainly on their handling of the NPLs, he said.

Although refusing to provide details, Tseng explained that further probes were initiated because of the complexities of certain cases.

Financial sources said that such probes mainly involve the examination of the auction procedures for bad loans, particularly if the auction prices appear to be unreasonably low, and possibly involved relevant parties in such transactions.

The sources said that top executives and banks under investigation would face administrative penalties when they were determined to have violated regulations.

The institutions and executives would be subject to criminal investigation for breach of trust or illegal diversion of corporate fund.

Given the relative ease with which this type of financial asset can be mishandled and the frequent use of loopholes for fraud, the FSC already issued a decree prohibiting banks from engaging in private transactions for NPLs starting in June 2005.

All such deals have to be made through the public auction procedure with full transparency, according to the decree. In addition, the inspectors and auditors at the FSC has been instructed to include the auction of NPLs at all financial institutions on the list of items requiring mandatory examination. Such measures were taken to prevent banking executives from using the sales of the NPLs for their personal gains or to benefit special parties.

Orchestrated by Wang You-theng, founder and owner of the Rebar Group, The Chinese Bank has been engaged in phony transactions with other affiliated enterprises in the same group.

Wang and his fourth wife Wang Chin Shyh-ying have been on the run after the government put them on the top of the most wanted list. They had fled to China and the United States before trying unsuccessfully to go to Myanmar (Burma) via Singapore.

Dozens of Wang’s family members and senior executives of various Rebar enterprises have been detained or banned from leaving the island pending further investigation.

Subscribe to The China Post and save.  Click hereSharePrintEmail

Write a Comment

Enter your comments - 800 characters max

Receive China Post promos

Respond to this email