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June 23, 2017

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Kinmen magistrate questioned over KKL scandal

TAIPEI, Taiwan -- Kuomintang (KMT) Kinmen Magistrate Lee Wo-shih (李沃士) and his wife Su Feng-ying (蘇鳳英) yesterday morning were summoned by the Kinmen District Prosecutors Office (KDPO) over their alleged involvement in a scandal involving Kinmen Kaoliang Liquor Inc. (KKL, 金門酒廠實業股份有限公司).

The prosecutors said that KKL allegedly amended its regulations to allow franchised dealer Cai Rui Trading Co. (CRT, 采瑞貿易上海有限公司) to avoid having its performance bond confiscated, violating the Anti-corruption Act.

The KDPO on July 22 searched the KKL headquarters and summoned the firm's General Manager Wu Chiu-mu (吳秋穆), Firich Enterprises Co. (FEC, 伍豐科技股份有限公司) Chairman Bill Hsu (徐明哲) and stockholder Huang Hsi-wen (黃希文) for questioning. FEC is CRT's parent company, prosecutors added.

Wu yesterday morning was released without bail, the KDPO said, adding that Hsu and Huang were released on bail of NT$1 million and NT$500,000, respectively.

The KDPO said that soon after Hsu and Huang established the CRT in Shanghai in 2010, the KKL canceled all existing franchised dealers' contracts in China and gave the CRT a three-year dealer contract for the entire Greater China area.

Kinmen prosecutors said that CRT did not satisfy its business objectives inked on the contract between 2010 and 2013, noting that, however, the KKL not only did not fine the firm but they also allegedly revised their regulations so that CRT's performance bond of 2.5 million yuan would not be confiscated. Prosecutors added that the CRT later took its performance bond back after its contract terminated in August 2013.

Magistrate's Alleged Involvement

Kinmen Magistrate Lee and his wife yesterday morning were stopped by investigators in front of their residence and were taken back to the Investigation Bureau's office in Kinmen for further questioning.

The KDPO said that the Kinmen City Government owns 100 percent of KKL, noting that Lee, as the city's magistrate, should hold himself accountable over the alleged illegal franchised dealer selection process in 2010. Prosecutors said that further questioning is needed to clarify Su's role in the incident.

The KDPO further noted that it is currently probing the key evidence behind the change of contract in 2010 and the amendment of the regulations in 2013.

The FEC yesterday released a press statement saying that its sub-subsidiary company CRT had ended its contract with KKL in August 2013, stressing that the contract details are the same with other franchised dealers.

The FEC further said that the CRT had reached its sales objectives during the three-year term, noting that, however, it decided not to renew the contract with KKL because of meager profits.

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