October 29, 2007 – After two years of legal battles, a district court in Hsinchu, Taiwan, has ruled that three former execs of foundry UMC broke no laws in their roles helping to set up Chinese chip company He Jian Technology (Suzhou) Co.
Taiwanese prosecutors had been pushing for jail time for former UMC chairman Robert Tsao for his company’s alleged illegal technology involvement with He Jian, even though a lower court this summer threw out fines levied against him.
The court ruled that there was insufficient evidence that UMC, led by Tsao and former vice-chairman John Hsuan, provided assistance to He Jian in establishing and operation, acquiring land, employees, technology, and developing a business strategy, and that there was no damage to UMC shareholder’s interest , citing a shareholder resolution supporting a proposed 15% stake in the Chinese company in “appreciation” for UMC’s help.
An Associated Press report noted that since UMC’s activities came under scrutiny, Taiwanese investments in China have surpassed $100 billion.
Prosecutors, who handed down the initial indictment in Jan. 2006, had sought up to 2 years jail time, and will appeal the verdict, according to Taiwan press reports. On July 19, the Taipei Administrative High Court invalidated a US ~$150,000 fine imposed on UMC, saying that UMC’s investment in He Jian can’t be classified as an investment since UMC only provided technical assistance, and that the government failed to sufficiently prove otherwise.
In their initial appeal, prosecutors claimed that an internal UMC document indicates Tsao and Hsuan intentionally committed “breach of trust” by offering UMC’s assets without charge — a different accusation that what the Ministry of Economic Affairs cited in its fines of the execs, according to the Taiwan Economic News, Taipei Times, and Digitimes.
After the court’s ruling, Tsao chided the prosecutor’s and MOEA’s Investment Commission’s “ridiculous and reckless” handling of the case (which they have vowed to appeal again), and is considering his own legal action against the Investment Commission.