The Great Taiwan Bubble: The Rise and Fall of an Emerging Stock Market by Champion Steven R

Author:Champion, Steven R. [Champion, Steven R.]
Language: eng
Format: epub
Publisher: Unknown
Published: 2012-06-27T16:00:00+00:00

“Shen retreated more deeply into his bunker.”

©United Daily News, Taipei

This period of relative calm was broken in early January. As the TSE index was readying its assault on its all time highs, Shen first announced that interest rates were being unilaterally decreased to the more sustainable rate of 1.4% per month and then, a few days later, again suspended withdrawals, payments of interest, and employee salaries for a two-month period. Contradicting previous statements, he stated that the company had sustained nearly $1.5 billion in withdrawals since the suspension on such transactions was lifted in October. Shen tried to sound reassuring as he emphasized that Homey was not bankrupt, noting:

"The suspension of payments doesn't mean that our company can't afford to pay interest. It is only a measure designed to safeguard the interests of investors. We want to allow investors to think over these next two months whether or not they want to keep Homey operational. If investors decide they don't want to continue or if they want us to close, we can do that." [165]

If his investors wanted the company to wind up its operations, Shen announced that it would repay them in orderly installments. Concurrently with these announcements, the Bureau of Investigation announced that 17 top Homey executives had been forbidden to leave the country, and a unit of the Ministry of Economic Affairs filed an emergency proposal with the Executive Yuan to freeze the assets of top corporate officials. These moves were too late to stop Shih Sze, Shen's starlet wife, who was variously described as having fled to Hong Kong or to the United States with large sums of money packed into her suitcases.

At this point, attention started to focus on the government's attitude toward Homey and Shen. The government seemed to understand the overall situation, and top officials seemed to be sincere, but no concrete steps were taken to deal with this time bomb waiting to explode. The Minister of Finance announced that her agency had done all that it could under its legal charter and that it had done its best to educate investors on the dangers of dealing with the underground investment companies. She noted that the MOF had referred the Homey matter to the Bureau of Investigation seven times but that no action had yet been taken. [166] She also pointed out that Homey was really the responsibility of the Ministry of Economic Affairs, which reasonably responded that it had referred the matter to the Bureau of Investigation as required by regulations more than two years ago, but the BOI was still collecting evidence and not yet ready to proceed. [167] Premier Lee Huan added to the confusion and ambiguity by declaring in a meeting of the Central Standing Committee that the government would assist underground investment houses in legalizing their operations through lawful means, but that its crackdown on illegal operations would continue.

The company continued to proceed as if it would somehow or other really transform itself into a legitimate enterprise. Shen

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