In a March 31 story, the Taipei Times quoted a report from the office of Democratic Progressive Party (DPP) Legislator Pan Meng-an (潘孟安) that alleged current shareholders at China Strategic Holdings Ltd (中策集團) — part of a consortium bidding for Nan Shan — included two Hong Kong stock traders who were fined by the SFC for “rampant speculation” and another who was indicted by the commission, also for speculation.
The three individuals are:
Ren Dezhang (任德章, Cantonese: Yam Tak Cheung), a Hong Kong stock trader who was fined by the SFC for speculation. He holds HK$400 million (US$51.5 million) in bonds and a 5.1 percent share of China Strategic.
In the “Successful prosecutions — disclosure of interests” of its annual 2007-2008 report, the SFC lists Ren as being convicted on April 26, 2007, and fined HK$1,500 plus HK$6,000 for investigation costs.
Zhen Zhiping (甄志平, Cantonese: Yan Chi Ping ) a Hong Kong stock trader, was sanctioned by the SFC for speculation in 2002. He holds HK$120 million in bonds and a 1.5 percent share of China Strategic.
Documents provided by the SFC show that Zhen was suspended for four months from Nov. 18, 2005, to March 17, 2006, for deceiving his employer, Get Nice Investment Ltd (結好投資).
“An SFC investigation found that Yan [Zhen] had acted dishonestly in conducting his own securities trading, without his employer knowing, through an account opened in the name of his friend, and in the process, earning bonuses from his employer to which he was not entitled,” the document says.
Through trading in his friend’s account between January 2002 and March 2003, Zhen received about HK$260,000 in bonuses.
The SFC said Zhen was guilty of misconduct and his fitness and probity were called into question.
Gu Baoshun (谷保順, Cantonese: Kuk Po Shun), a Hong Kong stock speculator, was indicted by the SFC for speculation in 2004 and later confessed. He holds HK$107 million in bonds and a 1.4 percent share of China Strategic.
In a Nov. 25, 2004, press release entitled “Failure to disclose interests results in prosecution,” the SFC reported that “Kuk Po Shun [Gu] pleaded guilty to breaching Part XV of the Securities and Futures Ordinance by failing to disclose, to HKEx and FT Holdings International Ltd (星采控股), his interests in shares in FT Holdings and his subsequent reduction in those interests.” Gu was fined HK$10,000 and ordered to pay the SFC’s investigation costs.
In October, a consortium formed by China Strategic and Primus Financial Holdings Ltd (博智金控) reached an agreement with American International Group Inc to acquire the US company’s 97.57 percent stake in Nan Shan for USS$2.15 billion.
However, concerns have since mounted in Taiwan over whether the consortium is backed by Chinese money and if major shareholders in the consortium are qualified to own shares in a Taiwanese insurance firm, given the above list of activities, including forgery, perjury, embezzlement and breach of trust.
This recently became a subject of dispute as the Insurance Act (保險法) does not specify criteria for reviewing shareholder eligibility or define the term “major shareholders.” Taiwan’s Financial Supervisory Commission said in February that it was working on amendments to the Act, which it hoped the Cabinet would approve in time for the review of the Nan Shan case.
Meanwhile, checks with Canadian intelligence could not confirm speculation, reported in the China Times on Oct. 21 last year, that Shandong-born Xiao Jianhua (肖建華), a Chinese stock trader who is allegedly leading the bid for Nan Shan, is in Canada. In its report, Pan’s office alleged that Xiao is on the run following involvement in two cases of stock speculation and insider trading, including Zhejiang Financial Holdings and Pacific Security.
This article was published today in the Taipei Times.