Letter to the SinoPac Financial Holdings Board of Directors Outlining Questionable Employment Policy of Senior Managers

2018-07-04 21:00 609

TAIPEI, , July 4, 2018 /PRNewswire/ -- Yuan Tong Investment Ltd. (a full subsidiary of PJ Asset Management) has sent out two letters to the board of directors of SinoPac Financial Holdings Company Limited ("SinoPac FHC" or "Company") in June 2018. The two letters, which are reproduced below, set out concerns of the repeating questionable actions on hiring senior managers with record of alleged misconducts. The original letters in Chinese can be found on PJAM's official website

The full text of the letters and important disclosures follow below:

Letter 1 (sent on June 26, 2018)

In Sinopac FHC's annual meeting held on June 15, 2018, no concrete responses were received regarding the questions raised by our company and other shareholders (abstract shown below). In accordance with our reservation of rights, please provide an explicit explanation.

1. Yuan Tong Investment Ltd, together with its affiliates, currently has a beneficial ownership interest of approximately 9.4% of the outstanding shares of the Company, collectively making us one of the Company's largest shareholders.

2. According to the MOPs issued by the Company on June 22nd, 2018, YEH, HUANG-CHI, the President of SinoPac Securities, who has been suspended by the Financial Supervisory Commission (the "FSC"), is still appointed by the Company as a director of SinoPac Futures. Clearly, this is highly unusual and should be further cause for serious concern across the entire shareholder base given FSC's continuous suspension of Mr. Yeh's job duties. Please explain what the considerations are when your board approved this director nomination.

3. Please formally reply to us with written and explicit explanations to our above question and the questions herein attached.

Best Regards,

Yuan Tong Investment Ltd.

Abstract of the Questions from Shareholders in the Annual Shareholders' Meeting of SinoPac FHC:

1. Many senior managers have/had been prosecuted or investigated by the FSC or prosecutor in the court. Yet there has been no clear evidence that the Company took any action against these managers for their wrongdoings. Such forbearance has caused us serious concern about the dysfunctionality of the Board, and please provide us up-to-date information if our understanding is incorrect.

2. The annual report does not disclose the clear job functions of high-salary senior managers, please describe the responsibilities and performance of these managers including the current recruiting policy, KPI measurement mechanism, and the relative comparison principles. From our understanding, approximately a dozen senior managers collectively received near NT$200 million renumeration in 2017, a high maintenance number in comparison with the managers of your peers with better performance. We have noted the Company's managers were paid quite well regardless of how poor the Company's performance has been over the past years. Please explain the rationale behind the Company's KPI measurement mechanism.

3. Chairman Ong has assumed his role for almost a year, however, except for paying a high price for engaging a consultant to review SinoPac FHC's corporate governance functionality, we have not seen any long-term operational strategies or aspirational outlook being explicitly expressed. The management team is still the same group of people with no sign of adjustment and change. Therefore, we would like to ask whether any long-term strategies or plans have been discussed by the board? How much time is needed in order for the Company to regain its profit momentum? Please explicitly explain your goal and business strategies.

Letter 2 (sent on June 29, 2018, with cc Labor Union of SinoPac FHC)

Regarding the recently questionable hiring of one senior manager who is suspended by the FSC we herein strongly oppose to the hiring and the decision-making process, both are contradictory to the principles of corporate governance.  

1. Yuan Tong Investment Ltd, together with its affiliates, currently has a beneficial ownership interest of approximately 9.4% of the outstanding shares of the Company, collectively making us one of the Company's largest shareholders.

2. The Company's engagement of Mr. Huang, who was suspended by the FSC for breaching his fiduciary duties and caused a tremendous loss at KGI bank, seems to be repeating the same logic as keeping YEH, HUANG-CHI, the ex-President of SinoPac Securities, in the senior manager position after YEH's suspension. We can hardly agree with the Company's corporate governance practice and hiring rationale.

3. Despite the newsletter issued by SinoPac Bank on June 28, 2018 to terminate the engagement of Mr. Huang, we simply cannot comprehend why the Board of Directors of SinoPac Bank approved the hiring in the first place if the board (as stated in the mentioned newsletter) was fully informed of Huang's situation? Was the real information properly presented to the board? Was the board fully convinced that Mr. Huang was an exceptional talent so as to be obstinate about the hiring regardless of Mr. Huang' track record? For the benefit of preserving our shareholder's rights, please provide explicit explanation.

4. SinoPac FHC has a long record of poor company governance practices over the years, and in the latest annual meeting the Company's Labor Union protested about the high employee turnover rate and its result of a sense of insecurity companywide. Under these circumstances, how can SinoPac FHC achieve its financial target as the Chairman promised in the annual meeting? We all know that a comprehensive business development strategy, a healthy corporate governance policy and high employee morale are key factors to drive the company's growth. We sincerely expect SinoPac FHC can learn from the past lessons and strive to create a win-win situation for the company, shareholders, and employees.

5. Mr. Huang's hiring was the second case that has happened within a month prompting the same concerns over the Company's recruitment process. Please reply back to us with written and explicit explanations to the above questions and the queries stated in our previous letter delivered on June 26, 2018.

Best Regards,

Yuan Tong Investment Ltd.

Media Contact
Pamela Wu
PJ Asset Management
+886-2-2791-6668 #712

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Source: Yuan Tong Investment Ltd.