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Updated Tuesday, October 9, 2007 0:00 am TWN, CNA

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Prosecutor urges criminalization of lax oversights by officials

TAIPEI, Taiwan -- Financial officials who have failed to actively fulfill their duties of overseeing banking, capital market and corporate operations should be subject to strict criminal penalties to ward off major economic and financial crimes, a prosecutor said Saturday.

Hsu Yung-chin, a head prosecutor with the Shihlin Prosecutor’s Office in Taipei City, made the appeal in a speech delivered at a seminar on updating the country’s financial supervisory mechanism to cope with emerging economic and high-tech crime.

Hsu, the country’s first prosecutor ever to be posted at a financial supervisory agency, said that during his stint as a prosecutor stationed at the Cabinet-level Financial Supervisory Commission (FSC), he came to find that many financial officials were passive in policing stock market operations and corporate accounting practices.

Hsu, who has investigated many high-profile financial scandals, including a Taiwan Development Corp. stock insider trading case involving Chao Chien-ming, President Chen Shui-bian’s son-in law, said economic crime, financial crime, and crime involving the rich and the famous could simply stem from weak corporate oversight.

However, these criminal activities might also involve legal, economic, social and political problems, Hsu said. For instance, a corporate financial scandal usually originates from “greed, “ but ruptures or negligence in the internal monitoring mechanism could also be a cause, he noted, adding that accounting and administrative overseeing units should reflect on whether they have fulfilled their duties of timely and effective supervision.

In the past, Hsu said, stock market price rigging and insider trading tended to be different in style. But nowadays, he said, the two criminal activities have often been intertwined. Worse still, big-time players now often simultaneously manipulate prices of many stocks, making it even more difficult for prosecutors to investigate.

If supervisory organs fail to actively cooperate with investigative and prosecutorial agencies, Hsu said, probes into such cases can be a tall order.

Against this backdrop, Hsu said, financial supervisors who have been lax or passive in carrying out their watchdog duties should be prosecuted and given harsh prison sentences to prevent corporate scandals and financial irregularities.

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