UNSTABLE CONDITIONS: Party chair Huang Kuo-chang said the shipbuilder in January faced a liquidity shortage and obtained financing with help of the financial watchdog
By Peng Wan-hsin, Wang Meng-lun and Jonathan Chin / Staff reporter, with staff writer
New Power Party Executive Chairman Huang Kuo-chang （黃國昌） yesterday said that former Financial Supervisory Commission （FSC） chairman Lee Ruey-tsang （李瑞倉） colluded with Ching Fu Shipbuilding Co to help the shipbuilder skirt its obligations to creditors.
When in office, Lee pressured First Commercial Bank — Ching Fu’s chief creditor — to alter the shipbuilder’s credit conditions, Huang told a news conference in Taipei.
The Taipei District Prosecutors’ Office should open an investigation of Lee and other FSC officials for possible malfeasance “with the greatest possible urgency,” he said.
Lee denied the allegations.
According to the original credit conditions, Ching Fu should have deposited into an escrow account 20 percent, or NT$3.4 billion （US$113 million）, of the NT$15.4 billion it has received from a NT$20.5 billion syndicated loan from First Commercial Bank and other state-owned lenders, Huang said.
However, Ching Fu’s escrow account holds only NT$2.91 billion, which is NT$550 million less than the stipulated amount, he said.
Ching Fu was able to withdraw NT$550 million from the escrow account because the First Commercial Bank-headed consortium in January altered the conditions, Huang said.
After reviewing FSC documents, Huang said he discovered that Lee, FSC Deputy Director of Banking Sherri Chuang （莊秀媛） and other high-ranking officials on Jan. 3 met with Ching Fu executives, including Ching Fu deputy chairman Chen Wei-chih （陳偉志）.
During the meeting, Chen Wei-chih told the FSC that the military had delayed a payment to Ching Fu, resulting in a NT$2.7 billion liquidity shortage for the shipbuilder, Huang cited the meeting transcript as saying.
After Chen Wei-chih asked the FSC to alleviate its problems by convincing the banking consortium to change the conditions on the loan, the FSC promised to liaise with First Commercial Bank about the issue, Huang said.
Shortly after the meeting, the consortium altered Ching Fu’s contractual obligations from having NT$3.4 billion of escrow in hand at the letter of credit’s issuance to having that amount at the letter’s presentation, Huang said.
The FSC’s alleged lobbying was inappropriate and possibly criminal, and the NT$550 million might well become bad debt, Huang said.
Lee rejected Huang’s accusations, saying that the lawmaker had omitted to show the second page of the two-page transcript.
Huang “deliberately took my comments out of context,” Lee said.
The FSC had to meet with Ching Fu’s representatives after the company complained that red tape was obstructing the government’s vessel renewal program, but the FSC did not lobby the consortium for the shipbuilder, Lee said.
“I told them on the spot that the FSC cannot and will not intervene and that they should speak to the banks themselves,” Lee said, adding that his refusal to have anything to do with the issue is a matter of record and can be found in the full transcript.
First Commercial Bank was informed of the incident as a matter of routine, but he explicitly told the commission that it need not discuss the issue with the bank, Lee said.
New Power Party Executive Chairman Huang Kuo-chang yesterday presents financial data regarding Ching Fu Shipbuilding Co’s credit conditions at a news conference in Taipei. Photo: Chu Pei-hsiung, Taipei Times