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FSC raises alarm over
Next Media deal
INDUSTRY CONTROL: The commission cited the
principle of separation of ‘banking and commerce’ and questioned the Koo
family’s total holdings in Chinatrust Financial
By Crystal Hsu / Staff reporter
Next Media Group’s (壹傳媒集團) deal to sell its media outlets in Taiwan may run
aground after the Financial Supervisory Commission (FSC) yesterday voiced its
strong objection to financial holding firms controlling media companies.
Jeffrey Koo Jr (辜仲諒), the eldest son of Chinatrust Financial Holding Co (中信金控)
founder and chairman Jeffery Koo (辜濂松), and related parties of Chinatrust
Financial, cannot have control over companies in both sectors, said Jean Chiu
(邱淑貞), deputy director-general of the commission’s Banking Bureau, citing the
principle of “separation of banking and commerce.”
“Koo Jr and family will have to reach a decision very soon detailing how they
intend to uphold the principle,” Chiu said by telephone.
Last month, Koo Jr inked a memorandum of understanding with Next Media Group to
buy the Hong Kong-listed firm’s Chinese-language Apple Daily, Taiwan Sharp
Daily, Next Magazine and Next TV for NT$17.5 billion (US$600 million).
The financial regulator made known its stance after Koo Jr, chairman of the
Chinatrust Charity Foundation, paid a visit to the commission earlier yesterday
to resolve potential regulatory resistance.
Koo Jr, who has teamed up with Formosa Plastics Group (台塑集團) chairman William
Wong (王文淵) and a Singapore-based private equity fund in the buyout attempt, is
expected to hold an investment meeting today and is scheduled to sign a
definitive agreement, as well as all other necessary legal documentation, with
Next Media on Saturday.
“The commission will adopt a strict reading of the laws governing financial
holding companies and qualifications for major shareholders to uphold the
principle of separation [of banking and commerce] and prevent a concentration of
power,” Chiu said.
While Koo Jr and his father own only 7 percent of Chinatrust Financial, lower
than the 10 percent regulatory threshold to be classified as “major
shareholders,” the Koo family and its related parties actually have majority
control of the conglomerate’s boardroom, Chiu said.
It is therefore inappropriate if the same parties also control, operate, or
represent media firms because it would render the nation’s financial stability
vulnerable in the event of a scandal or cyclical volatility, she said.
“The Koo family must address those concerns,” Chiu said. “Assurance by
Chinatrust Financial that it will not provide funding to Koo Jr is not enough.”
The commission will not turn a blind eye if the Koo family seeks to circumvent
the separation rule through other means, Chiu said, adding that Koo Jr had
promised to brief the public on the matter in the next few days.
The anti-media monopoly alliance raised similar concerns yesterday, saying that
Koo Jr had been involved in financial scandals and was unfit to run a media
corporation.
One of the financial scandals in which Koo was involved was Chinatrust
Financial’s flawed bid for rival Mega Financial Holdings Co (兆豐金控) in 2006 —
known as the Red Fire Case (紅火案), after the name of the offshore company used to
conduct the illegal transaction. He had evaded an arrest warrant and hid in
Japan for two years before returning to Taiwan in 2008. He was the vice chairman
of Chinatrust Financial at the time.
Chen Hsiao-yi (陳曉宜), organizer of the alliance, said Koo Jr was not fit to run a
media business because he had been sentenced to nine years in jail by the Taipei
District Court in 2010 for the illegal takeover bid for Mega Financial in
violation of the Securities Exchange Act (證券交易法) and the Banking Act (銀行法).
Koo’s case is under appeal.
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