TSMC Chairman Caught up in Political Fiasco

The chairman of the world's largest contract chip maker has found himself drawn into the corruption case against the former president of Taiwan and his wife after a Chinese language magazine named him among a group of Taiwanese businessmen that illegally gave them money.

Morris Chang, the founder and chairman of Taiwan Semiconductor Manufacturing (TSMC), was part of a group of 20 Taiwanese businessmen who allegedly made NT$3 billion (US$86.8 million) in illegal personal donations to the former first lady of Taiwan between 2000 and 2004, Next Magazine said, citing court documents.

TSMC responded with a statement denying any wrongdoing, a rare move for the chip maker, which normally refuses to comment on such reports.

"Neither I nor TSMC have any reason to give money to Wu Shu-jen or former President Chen Shui-bian," said TSMC's chairman in the statement, adding, "I cannot accept this insult to my integrity."

The former president of Taiwan and his wife were indicted by Taiwanese prosecutors last December on charges of corruption, including money laundering and embezzlement.

In court last week, Wu pled guilty to forgery and accepting money from businessmen.

On Wednesday, Next Magazine cited affidavits the former first lady gave to Taiwanese investigators that named the 20 businessmen as the source of the NT$3 billion they found at Cathay United Bank.

The list of names includes the most important people in Taiwan's business community and technology industry, such as Terry Gou, chairman of the world's largest contract electronics manufacturer, Hon Hai Precision Industry; Douglas Hsu, head of the Far Eastern Group; and Wang Yung-ching, founder of the Formosa Plastics Group.

Gou allegedly gave the former first lady NT$30 million, Hsu, NT$50 million and Wang, NT$100 million, according to the report. TSMC's Chang allegedly chipped in NT$20 million.

Andrew Teng, an assistant vice president at Taiwan International Securities, called the news report "damaging" to the business people named on the list.

"Morris Chang is well respected and looked at as an honest person," he said. "But, whether the magazine report is correct or not, people tend to believe what they read."

In the statement, TSMC said it made legitimate political donations between 2000 and 2004 to both major parties in Taiwan, the Kuomintang (KMT, or Nationalist Party) and the Democratic Progressive Party (DPP). The DPP is the former president's party.

TSMC donated NT$203 million to the KMT and a total of NT$120 million to the DPP. The company paid by check and kept official receipts for the transactions to ensure they were properly booked.

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