- Mega chairman cuts short U.S. trip and quits all bank posts
- Board will pick temporary replacement, Finance Ministry says
Mega Financial Holding Co.’s chairman resigned after less than a month in the post, the latest setback for the Taiwanese company at the center of a domestic firestorm over U.S. anti-money laundering breaches at its banking unit.
Shiu Kuang-si also quit as head of Mega International Commercial Bank, only 16 days after being elected to both positions. The executive had previously been chairman of Hua Nan Financial Holdings Co., another state-backed Taiwanese lender, and the state-owned Land Bank of Taiwan.
“It’s difficult for my role to have trust from the public now,” Shiu said in an e-mail Wednesday. He shortened a visit to U.S. branches to look into why Mega International was fined $180 million by the New York Department of Financial Services earlier this month. The regulator cited an inadequate compliance program in relation to the prevention of money laundering.
Premier Lin Chuan told reporters Tuesday that Taiwan investigators haven’t yet confirmed whether the bank was involved in money laundering. Lawmakers from the ruling Democratic Progressive Party last week alleged members of the previous Kuomintang administration, including former President Ma Ying-jeou and his advisers, may have used Mega to launder party assets. A government committee is reviewing some of the KMT’s assets obtained after the end of World War II, which were deemed potentially improper by parliament last month.
“The accusations are false,” Eric Huang, a spokesman for the KMT, said by phone in response to the legislators’ accusations.
In addition to the compliance violations, suspicious transactions flowed between Mega’s New York and Panama branches and a substantial number of customer entities were apparently formed by Mossack Fonseca, the law firm at the center of the Panama Papers scandal, the New York Department of Financial Services said Aug. 19. Former Mega Chairman McKinney Tsai denied the bank was involved in money laundering and blamed breaches of notification rules on a lack of familiarity with U.S. law.
Taiwan’s Finance Ministry, the largest single investor in the bank’s parent company with 8.4 percent of outstanding shares, said Wednesday the board of directors would select an acting chairman until it makes a new appointment.
Mega Financial shares have fallen 9.2 percent in Taipei since the New York regulator announced its fine. A government task force looking into the penalty will finish its probe by the end of September, according to Taiwan’s cabinet.