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December, 11, 2016

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Bank of Kaohsiung chairman to head FSC

The Executive Yuan has appointed Bank of Kaohsiung Chairman Lee Ruey-tsang (李瑞倉) as chief of the Financial Supervisory Commission (FSC, 金管會).

Cabinet spokesman Hsu Kuo-yung (徐國勇) said Lee would formally take up his new duties within the next few days.

The appointment, made Wednesday, fills the void left by the resignation of former FSC head Ding Kung-wha (丁克華).

Ding stepped down after the FSC was criticized for its handling of a scandal involving allegations of money-laundering by the state-run Mega Financial Holding Co. (兆豐金控).

The financial group was handed a massive fine by U.S. regulators after conducting a series of suspicious transactions.

Hsu said Premier Lin Chuan (林全), who previously worked with Lee at the Ministry of Finance, had expressed confidence in Lee's professional capabilities.

Lee was deputy finance minister under President Chen Shui-bian (陳水扁), later becoming head of Kaohsiung City's Finance Bureau in 2011.

During his time in Kaohsiung, he opened new revenue streams by repurposing vacant spaces as well as assembling a financial reform team to reduce municipal debt and boost capital expenditure.

Kaohsiung Mayor Chen Chu (陳菊) soon promoted him to secretary-general of the city government, before handing him the chairmanship of the Bank of Kaohsiung.

Suitability Questioned

Lee's suitability for the post has been called into question, given that his professional background has largely involved the supervision of state-owned assets.

Soon after the Cabinet's announcement, the Chinese-language United Daily News criticized the selection, but said it was not a surprise given the candidate was "politically correct."

The newspaper added that: "On the contrary, former chief Ding Kung-wha has stepped down precisely because he was found to be politically incorrect — uncooperative to deep-green, pro-independence supporters in their attack on Kuomintang (KMT) through the Mega Bank scandal."

According to local media, Lee had assisted the Democratic Progressive Party (DPP ) pursuit of the opposition KMT's ill-gotten party assets while head of the Finance Ministry's National Property Administration from 1999 to 2004.

Money Laundering Scandal

The Cabinet's intergovernmental investigation team on Monday invited financial governance experts to offer their take on Mega Bank's alleged money laundering.

During the meet, the experts urged the state-run bank to commit to promoting a comprehensive culture of legal compliance throughout the firm.

Officials representing the Finance Ministry and the FSC proposed measures to take to improve management of state-run companies and to strengthen the financial regulatory system.

Invited experts agreed that the U.S. regulator's fine and later developments were due to the longstanding neglect of problems within the bank's organizational structure and culture, adding that unless they take time to adjust, other bank branches would encounter similar issues.

On Aug. 19, New York State's Department of Financial Service (DFS) slapped a US$180 million fine on Mega Bank after identifying "a number of suspicious transactions" between its New York and Panama branches.

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