Mega Financial scandal claims first Taiwan administration victim as top regulator quits (updated)

Mega Financial Holding Co

03/10/2016 10:23

* In office since May, FSC chief Ding Kung-Wha steps down 
    * Move to reduce damage to FSC as probe continues -statement 
    * Ding "didn't have to take blame" - opposition lawmaker 
    * Taiwan bourse chairman could be successor - lawmaker 
    * Ding successor at FSC yet to be decided - Taiwan cabinet 
 
 (Recasts, adds details, lawmaker comments) 
    By Faith Hung 
    TAIPEI, Oct 3 (Reuters) - Taiwan's top financial regulator 
resigned on Monday as a scandal over state-run institution Mega 
Financial's  2886.TW  New York bank branch breaching anti-money 
laundering regulations claimed its first victim among officials 
on the island. 
    Ding Kung-Wha, the chairman of the Financial Supervisory 
Commission (FSC), stepped down amid mounting criticism over the 
watchdog's effectiveness. The Mega Financial branch was fined 
$180 million by U.S. authorities for violations of rules 
including lax attention to risk exposure in Panama.  urn:newsml:reuters.com:*:nL3N1BB2ND 
    In a statement released by the FSC, Ding, 62, said he hoped 
his resignation would reduce damage to the FSC over the Mega 
Financial scandal. President Tsai Ing-wen has said the case had 
damaged Taiwan's reputation and created public mistrust about 
supervision of the financial sector.  urn:newsml:reuters.com:*:nL3N1BC1PZ 
    But Tsai's opponents on the island said the official's 
departure was a symbolic political gesture that put 
disproportionate blame on Ding, who only assumed his position 
with the FSC in May of this year. A veteran of Taiwan's 
administration not widely known in international finance 
circles, Ding previously served as chief of the Taipei Exchange 
and as a finance ministry official.     
    "Ding submitted his written resignation this morning," 
cabinet spokesman Hsu Kuo-yung said at a news conference. Hsu 
said Ding's view was that he had done as much as he could in his 
role as chairman to assist the investigation and efforts to 
improve the FSC. 
    Ding's successor has yet to be selected, Hsu said. 
    One potential candidate to replace him, according to 
political sources in Taipei, is Shih Jun-ji, current chairman of 
the Taiwan Stock Exchange. Shih has previously served a brief 
stint as the FSC's chief. 
    An emergency task force set up by President Tsai is now 
supervising a probe into the violations of U.S. regulations. But 
opposition politicians said Ding was carrying responsibility 
just a few months after taking office for transactions that did 
not originate in Taiwan itself.  
    Ding and some legislators held a closed-door meeting last 
week on details of 174 suspicious transactions belonging to 76 
accounts processed in Mega's New York branch. None of the 
transactions were from Taiwan, according to Lai Shyh-bao, a 
prominent member of opposition party Kuomintang (KMT), and other 
people with direct knowledge of the matter. 
    "He (Ding) did not have to take responsibility," said Lai. 
"Some supporters of President Tsai thought he is too 
bureaucratic. He has financial expertise, but is not skilled in 
politics." 
    In addition to the Mega Financial scandal, the FSC has faced 
criticism over its handling of a case involving XPEC 
Entertainment, a Taiwanese gaming software developer. 
    Investors in XPEC have suffered heavy losses after a tender 
offer for of a stake in the company by a Japanese suitor went 
sour, domestic media have reported, with some complaining the 
FSC should have taken regulatory action over the way the offer 
was managed. 
 
 (Reporting by Faith Hung; Additional reporting by Jeanny Kao 
and Emily Chan; Editing by Kenneth Maxwell) 
 ((faith.hung@thomsonreuters.com; 8862 2500 4893; Reuters 
Messaging: faith.hung.thomsonreuters.com@reuters.net)) 
 
Keywords: TAIWAN FINANCIALREGULATOR/