Ex-CTBC Financial vice chair gets 92 months in jail over property scandal

Taipei, May 13 (CNA) Jeffrey Koo Jr. (辜仲諒), former vice chairman of CTBC Financial Holdings Co., has been sentenced to a jail term of seven years and eight months for his role in a building purchase scandal, the Taipei District Court said Tuesday.

Prosecutors said Koo and his colleagues inflated the purchasing price to buy a building for NT$950 million (US$31.15 million), higher than a fair market price of NT$850 million, causing a loss of NT$100 million for CTBC Financial.

Koo and three of his colleagues have denied any wrongdoing, but the court said the transaction, masterminded by the four plaintiffs, had disrupted order in the financial market.

Citing the Securities and Exchange Act, the court said in a statement that Koo and his colleagues violated rules governing transactions with related parties and breach of trust in the deal for CTBC Financial to buy the building for a floated price in 2005, when he served as vice chairman of the financial firm.

In 2019, prosecutors indicted Koo and his colleagues, including former CTBC Financial chief financial officer Perry Chang (張明田), former CTBC Bank chief financial manager Lin Hsiang-hsi (林祥曦), and former CTBC Investment Service board member Lee Sheng-kai (李聲凱), for their alleged involvement in the deal.

The court said that the four plaintiffs showed a bad attitude after committing the crime.

Chang, Lin, and Lee were sentenced to eight years, nine years and six months, and nine years and four months, respectively, according to the court ruling.

The court said that while the ruling is subject to an appeal, Koo has been banned from leaving the country.

According to prosecutors, the four were also accused of breach of trust, fabricating financial results, and involving transaction irregularities in another deal in which CTBC Bank, the flagship banking unit of CTBC Financial, bought bad loans from several other companies.

Koo's former brother-in-law, Chen Chun-che (陳俊哲), also played a critical role in the building transaction and bad loan case, but as he has fled overseas, he has been placed on a fugitive list, prosecutors said.

In a separate statement, CTBC Financial said that the court had misunderstood these transactions and insisted the deals were in favor of the company.

CTBC Financial said it supported Koo and his colleagues in seeking legal redress to clear their names.

Prosecutors launched an investigation into the building and bad loan transactions after they found irregularities as they were probing another financial scandal involving an offshore "paper company," Red Fire Development, that dated back to 2004.

In 2024, the Supreme Court ordered a retrial, citing inadequate reasoning in a high court decision, which had cleared Koo of allegations in the so-called "Red Fire" case under the Banking Act and the Criminal Code for causing significant financial losses to CTBC Bank.

Koo stepped down as vice chairman of CTBC Financial after he was indicted in the "Red Fire" scandal in 2006. He now chairs the CTBC Charity Foundation.