Mega Financial's new chairman promises reform after U.S. fine (updated)

Mega Financial Holding Co

02/09/2016 11:51

* New chief vows to beef up risk management, get to bottom 
of case 
    * Taiwan President calls case "ridiculous and incredible" 
    * Cenbank issues rare statements clarifying cenbank chief's 
role 
 
 (Adds comments from Taiwan regulator, background) 
    By Faith Hung and Liang-Sa Loh 
    TAIPEI, Sept 2 (Reuters) - Mega Financial Holding's 
 2886.TW  new chairman said the Taiwan state-controlled firm 
will strengthen risk management after its banking unit was hit 
by a U.S. fine for anti-money laundering violations, a case that 
has hugely embarrassed the island's government. 
    "There are lots of doubts about us. We'll do whatever we can 
to find out what has happened," Michael C.S. Chang, 68, told 
reporters on Friday. "We are going to have a deep review and 
thorough reform." 
    Chang, who took up his post on Friday, will have to clean up 
what Taiwan President Tsai Ing-wen has called a "ridiculous and 
incredible" matter, which is threatening to seriously undermine 
her three-month-old administration.  urn:newsml:reuters.com:*:nL3N1BC1PZ 
    New York authorities in mid-August slapped Mega 
International Commercial Bank with a $180 million fine for 
violations that included lax attention to risk exposure in 
Panama, the first time in a decade that a Taiwan-based financial 
institution has been penalized by U.S. authorities.  urn:newsml:reuters.com:*:nL3N1B4221 
    Taiwanese financial regulators flew to Panama and New York 
this week to continue their investigation into whether Mega's 
activities led to breach of any Taiwanese laws.   
    In 2009, Mega's banking unit also ran afoul of Australian 
authorities over compliance and anti-money laundering rules. 
    A trained accountant, Chang is known as a firefighter who 
has dealt with Taiwanese lenders in crisis before. 
    Taiwan's ruling Democratic Progressive Party (DPP), during 
its previous term in office, appointed Chang as chairman of 
First Financial Holding Co  2892.TW , another major 
state-controlled financial firm, where he held the position from 
2006 to 2008. 
    Chang's predecessor, Shiu Kuang-si, quit on Wednesday two 
weeks after being appointed as chairman, in a bid to address  
allegations of conflicts of interest. Shiu was president of Mega 
when the suspect transactions took place, and he is the 
brother-in-law of Taiwan's central bank chief.  urn:newsml:reuters.com:*:nL3N1BC1PZ 
    Another former Mega chairman, Tsai Yeou-tsair, who resigned 
in March, has been banned from travel abroad, while a former 
finance minister has been questioned by prosecutors. 
 urn:newsml:reuters.com:*:nL3N1BA2IA 
    Taiwan Premier Lin Chuan has also had to weather calls to 
resign, with critics blaming him because the boards of 
state-controlled financial institutions are packed with 
government-selected appointees. 
    The case has embroiled the central bank, which prides itself 
on being an independent institution and has been headed by 
Governor Perng Fai-nan, 77, for 18 years. 
    This week the central bank was forced to issue rare 
statements stating Perng was involved in the Mega case only at 
the request of other financial regulators in Taiwan.  
    Financial Supervisory Commission Vice Chairman Kuei 
Hsien-nung in early August requested Perng's help to plead with 
U.S. authorities, including the Federal Reserve Bank of New 
York, for more time for Mega to deal with the case.  
    "At the time, there was no information that showed Mega was 
related to any criminal liability," Kuei told Reuters this week. 
"This was all done for the country. We would not have selfish 
intentions," he said.   
 
 (Writing by J.R. Wu; Editing by Stephen Coates and Muralikumar 
Anantharaman) 
 ((faith.hung@thomsonreuters.com; 8862 2500 4893; Reuters 
Messaging: faith.hung.thomsonreuters.com@reuters.net)) 
 
Keywords: MEGA FHC MANAGEMENT/