Mega Financial's new chairman promises reform after U.S. fine

Fri Sep 2, 2016 6:56am EDT
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By Faith Hung and Liang-Sa Loh

TAIPEI (Reuters) - Mega Financial Holding's (2886.TW: Quote) new chairman said the Taiwan state-controlled firm will strengthen risk management after its banking unit was hit by a U.S. fine for anti-money laundering violations, a case that has hugely embarrassed the island's government.

"There are lots of doubts about us. We'll do whatever we can to find out what has happened," Michael C.S. Chang, 68, told reporters on Friday. "We are going to have a deep review and thorough reform."

Chang, who took up his post on Friday, will have to clean up what Taiwan President Tsai Ing-wen has called a "ridiculous and incredible" matter, which is threatening to seriously undermine her three-month-old administration.

New York authorities in mid-August slapped Mega International Commercial Bank with a $180 million fine for violations that included lax attention to risk exposure in Panama, the first time in a decade that a Taiwan-based financial institution has been penalized by U.S. authorities.

Taiwanese financial regulators flew to Panama and New York this week to continue their investigation into whether Mega's activities led to breach of any Taiwanese laws.

In 2009, Mega’s banking unit also ran afoul of Australian authorities over compliance and anti-money laundering rules.

A trained accountant, Chang is known as a firefighter who has dealt with Taiwanese lenders in crisis before.

Taiwan's ruling Democratic Progressive Party (DPP), during its previous term in office, appointed Chang as chairman of First Financial Holding Co 2892.TW, another major state-controlled financial firm, where he held the position from 2006 to 2008.   Continued...

A sign of Mega Financial Holding Co is seen outside its headquarters in Taipei, Taiwan August 23, 2016. REUTERS/Tyrone Siu - RTX2MO7Q