In the past 100 years, Taiwan Fertilizer failed to invest in mainland China to set up a factory, and lost more than NT$300 million because it helped the investment company to guarantee loans. The Taipei District Prosecutor’s Office today charged then chairman Zhong Rongji, deputy general manager Zhou Weixin, and investment director Liu Yizhong for violating the Securities and Exchange Act. Prosecutors pointed out that Taifei Cayman Company, a subsidiary of Taiwan Fertilizer, and Jinqun Company jointly established Xuchang Cayman Company as an overseas holding company during the 100 years of the Republic of China, and transferred investment to establish Xuchang Chemical Technology Company in Kunshan, mainland China.
At the end of 100, Xuchang Company urgently needed funds for purchasing equipment and operating turnover, but due to factors such as the unavailability of capital in mainland China, it then requested Taiwan Fertilizer Company to apply for a US dollar loan from a domestic bank. However, after assessing the financing risks, domestic banks required Taiwan Fertilizer and Jinqun to make joint and several guarantees.
The prosecutor stated that Zhong Rongji and others proposed at the board of directors at the end of the same year that the case of Xuchang Company’s financing of 10 million US dollars to the bank should be carried out by means of joint guarantees between Taiwan Fertilizer Company and Jinqun Company, and claiming that it was in compliance with the regulations, so that the directors present were mistrusted by the law. The proposal was passed and financing to the bank was successful.
The prosecutor pointed out that the loan case of Xuchang Company was automatically postponed for one year due to its operation not as expected, and the financing deadline of 103 years was approaching. Both Xuchang Company and Jinqun Company replied to the bank that they did not have sufficient funds. The fertilizer company pressed for the loan. Taiwan Fertilizer Company was forced to pay off a total of more than 10.01 million US dollars in subrogation since 2010.
The prosecutor stated that Xuchang Cayman Company and Xuchang Chemical Technology Company were dissolved in 105 years, and Taifei Company was unable to recover the subrogation payment, resulting in heavy losses to the company.
Prosecutors believe that Zhong Rongji and the other three people pushed the joint guarantee case subjectively to prevent Xuchang Company from being affected by the lack of funds for its construction and operations. The financing did not go into the three people’s accounts, which did not constitute criminal breach of trust or breach of trust. For the crime of breach of trust in the Securities and Exchange Law, three persons were prosecuted for the crime of damaging the company’s assets.