Chinatrust execs referred to prosecutors

Wrapping up a two-year probe of the case, agents of the Investigation Bureau (IB) under the Ministry of Justice have transferred the case to the Taipei District Prosecutors’ Office.

Koo, the second son of veteran financier Jeffrey L.S. Koo, Sr., and his close aides were suspected of committing irregularities in an attempt by China Development Financial Holding, one of the Chinatrust Group’s affiliates, to acquire Taiwan International Securities and Global Securities Finance, in a hostile takeover.

According to the IB, the suspects created opportunities for three overseas investment parties to reap NT$400 million in the process in 2005 by buying Taiwan International shares low and selling them when the prices went up in the heated financial battle after shareholders of the targeted firm put up a good fight to repel the uninvited takeover.

The three overseas investment parties — Mega Advance, Poweredge Investment Ltd. and an individual Ms. Elena Budescu — were found to have earlier connections with Koo and other members on his top management team.

IB agents described the three investment groups as “false foreign investors,” although there were foreigners or organized abroad.

The agents also suspected irregularities in the package deals of selling more than 200 overseas electronics and biotech firms purchased or set up by China Development Industrial Bank at relatively high costs to two foreign private equity funds at low prices.

Managers handling the massive sales then left China Development Industrial Bank to take up positions at the foreign equity funds.

Koo himself was questioned in June. He said he was not aware or involved in all of these alleged scams.

He admitted making some administrative flaws in the process of acquiring a 36 percent stake in Global Securities Finance in the controversial takeover.

Executives of China Development Financial Holding expressed regret over the IB action.

They said they were first interviewed as witnesses or “relevant parties” in the probe, but have now become “suspects” involving the cases.

The executives said they had told investigators all they knew. They expressed hope and confidence that they will be exonerated when the prosecutors complete the investigation.

Koo was not the first top executive of the Chinatrust Group and member of the Koo family to be involved in serious legal and financial cases.

Jeffrey J.L. Koo, Sr., Koo’s elder brother and a former top executive of Chinatrust Financial, was allegedly involved in irregularities in a separate takeover attempt targeted at Mega Financial Holdings when he was eager to expand Chinatrust operations on a fast track.

He has been put on a wanted list by the government for repeatedly refusing to answer the summons of prosecutors. He has not returned to Taiwan after taking a trip to Japan to meet his children there last year.

Chinatrust Financial Holding was forced to abort the attempted takeover of Mega Financial Holdings, in which the government still controls a huge stake, following criticism by some lawmakers.

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