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Five BenQ Executives Indicted
Prosecutors in Taiwan have indicted five top executives of BenQ Corp., including the chairman and president, for insider trading.
May 8, 2007
2 Min Read
TAIPEI, Taiwan — Five BenQ Corp. executives, including its chairman and president, have been indicted for insider trading and face prison terms of several years if convicted. It is the latest blow to a company struggling to right itself after a disastrous attempt to takeover Siemens AG's loss-ridden handset unit in late 2005.
The five executives indicted Tuesday are K.Y. Lee, chairman; Sheaffer Lee, president; Eric Yu, chief financial officer, as well as one financial and one accounting executive. They were charged with breaking securities trading laws and money laundering, according to the Taoyuan District Prosecutors Office.
In a statement, BenQ said it was "deeply shocked, baffled and finds (the indictments) unacceptable." It vowed to fight the accusations in court. BenQ did not immediately respond to a request to speak with executives.
There have been inklings of something like this coming for Taiwan's largest consumer electronics manufacturer. Yu, the CFO, was arrested in mid March after a raid on BenQ offices. He has been in jail since then, while the president and chairman have been free on bail.
Prosecutors are trying to prove the executives sold stock in the spring of 2006, shortly before they announced larger than expected quarterly losses of about $176 million from the acquisition of a mobile phone unit from Germany's Siemens Group. Eventually, the company spent nearly $1 billion trying to turnaround the unit, but failed. It went bankrupt and is now in liquidation.
The prosecutor is accusing BenQ executives of using their insider's knowledge to benefit from the share sale. One report put the profit at about $7 million. They then allegedly moved the cash to an offshore bank account in Malaysia, eventually funneling it back to Taipei. After news of huge losses in the mobile unit sent BenQ's stock south, the money was allegedly used to buy back the shares.
BenQ denied the claim. It says the transactions were part of a scheme to exercise stock options for overseas employees who could not legally trade shares in Taiwan.
It also said the huge losses announced in the spring of 2006 were anticipated by the market. "It was publicly known that there must be losses in the Company's consolidated revenues in the early stage after the Siemens mobile device business acquisition," BenQ said in a statement. "It was no secret. The management team of the Company certainly did not use such information to engage in insider trading to gain profits."
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