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Far East head halts investment to secure Sogo ownership

2012/05/07 21:38:45

Taipei, May 7 (CNA) Far Eastern Group Chairman Douglas Hsu said Monday he is halting further investment in Taiwan in protest of what he described as the government's intervention in the operations of a subsidiary, the country's second-largest department store chain.

The business tycoon contended that the Department of Commerce under the Ministry of Economic Afairs acted beyond its authority by approving last week an interim shareholders meeting proposed by three interim administrators of Pacific Distribution Investment Co., the holding company that owns Pacific Sogo Department Stores Co. Ltd.

The authorities also ordered the company to hold an election of Sogo's board members within three months.

Hsu argued, however, that the controversy over the operating rights to the profitable stores and control of Pacific Distribution Investment was still mired in legal proceedings and that the legality and propriety of the interim administrators remained questionable.

As a result, Hsu said, he was putting to a halt any investment in Taiwan as a protest against the government's move.

Meanwhile, the group's U-Ming Marine Transport Corp. said the company was not affected by Hsu's decision because none of its operations were connected to the department store.

Hsu has fought for ownership of Sogo with Lee Heng-lung, chairman of Pacific Distribution Investment Co., whom the Commerce Department recognizes as the department stores' legal owner.

The Far Eastern Group obtained control of Pacific Sogo Department Stores in September 2002 when it recapitalized Pacific Distribution, which is the majority shareholder of Pacific Sogo.

But the recapitalization move has been challenged and overturned in court proceedings, calling into question Far Eastern's ownership of Pacific Sogo.

(By Lin Meng-ju and Kendra Lin)