The CEO and other executives of one of Taiwan’s largest asset management companies are being held incommunicado after being questioned over an alleged national labor fund investment scandal, the Taipei District Prosecutor’s Office said Friday (Dec. 11).

The office launched the third stage of its bribery investigation on Thursday (Dec. 10). A Ministry of Labor official responsible for labor fund management was arrested two weeks ago for allegedly engaging in stock speculation.

You Wei-wen (游迺文), who had been working as a chief asset management officer for the fund, is accused of accepting bribes from PJ Asset Management (PJAM) speculators in exchange for getting rid of a large chunk of shares after a failed attempt to manipulate Far Eastern Group stock (TW-2903). This resulted in astronomical losses for the national labor fund, which bought shares at a premium.

Fuh Hwa International Asset Management (復華投信) was involved in the problematic shares transaction. Sources familiar with the matter told Taiwan News the company had experienced abnormal employee turnover before You was nabbed in the bribery investigation.

The investigation found that You had bypassed qualified traders after they refused his request to bid for the stock at such an unreasonable price. He allegedly turned to Fuhua’s traders to place orders “after an expensive dinner banquet” in July that was also attended by PJAM executives, allowing the asset management firm to dump its shares at the more desirable price of NT$24.75 (US$0.88), according to media reports.

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