《TAIPEI TIMES》 Far Eastern Air Transport’s Chang Kang-wei charged

By Jason Pan / Staff reporter

Taipei prosecutors yesterday charged Far Eastern Air Transport Corp （FAT, 遠東航空） chairman Chang Kang-wei （張綱維） with fraud after he allegedly embezzled NT$3.59 billion （US$121.61 million）.

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The prosecutors also charged First Financial Holding Co （第一金控） chairman Jason Liao （廖燦昌） — who also heads First Commercial Bank （第一銀行） — and Land Bank of Taiwan （臺灣土地銀） chairman Hwang Bor-Chang （黃伯川）, along with several executives of Taiwan Cooperative Bank （合作金庫銀行）.

The charges sent shock waves across the financial sector, as the scandal implicated the nation’s foremost banks, and Liao and Hwang lead state-owned banks — although the incident happened in 2016, when Liao and Hwang were chairman and senior executive of Taiwan Cooperative Bank.

The Taipei District Prosecutors’ Office charged 10 people with embezzlement, breach of trust, fraud, breaching the Banking Act （銀行法） and the Securities and Exchange Act （證券交易法）, and related charges.

Chang in 2009 founded the business conglomerate Huafu Enterprise Holdings Ltd （樺福集團）, before acquiring Taiwanese airline FAT — which was established in 1957 — and investing in hotels and property development.

Investigators said that Chang, when Huafu Enterprise began to post losses in 2011, took out NT$840 million in loans from the Bank of Taiwan （臺灣銀行）, Mega Commercial Bank （兆豐銀行） and Far Eastern International Bank （遠東商銀）.

Financial records showed that in 2014 and 2015, Chang negotiated NT$2.13 billion in loans with Entie Commercial Bank （安泰銀行） to pay off the Huafu Enterprise debts, but incurred about NT$490 million in interest charges.

Chang allegedly defrauded the banks by doctoring financial reports, and promising to restructure FAT and his other subsidiaries, investigators said.

In 2016, Chang negotiated a NT$2.2 billion loan for FAT from Taiwan Cooperative Bank, which he allegedly used to pay off loans owed to Entie Commercial Bank, they said.

Prosecutors said that in 2016, Chang tried to obtain loans from Land Bank of Taiwan and Cathay United Bank （國泰世華銀行）, but was rejected as FAT was being restructured and was considered too high a risk.

In April 2016, Chang sought financial assistance from Liao, then chairman of Taiwan Cooperative Bank and a personal friend, before Liao introduced him to Hwang, then credit management department head at the bank’s Taipei headquarters, but Hwang’s subordinates uncovered FAT’s financial irregularities, prosecutors said.

Chang allegedly asked Liao to transfer his loan application to a more cooperative department and Liao had Hwang — who had gotten promoted to bank vice president — to personally handle the matter, they said.

Liao and Hwang allegedly ordered associate managers Chen Shih-chin （陳世卿） and Lin Wen-li （林文理） to approve the loan for FAT, they said.

Although Lin estimated a loan of about NT$2.1 billion based on FAT’s valuation and collateral, Hwang allegedly told Lin to go to NT$2.25 billion, which was approved at the bank’s board of directors meeting in July 2016, they said, adding that the loan helped Chang hide FAT’s massive debt liability, which resulted in the airline ceasing operations on Dec. 12 last year when it could not repay the loan.

新聞來源：TAIPEI TIMES