Culture of corruption at Taiwan's oldest tiremaker

Want China Times, Huang Tsung-yuan and Staff Reporter 2014-07-19

The Nankang Tire factory in Taipei, July 16. (Photo/Wang Ying-hao)

Nankang Rubber Tire Company, Taiwan's oldest tire manufacturer, managed to maintain an increase in its share prices despite an internal scandal in which one of the firm's high-ranking managers took bribes from clients for 17 consecutive years, writes our sister paper Taipei's China Times.

Nankang Rubber Tire Company started operations in 1940, founded by a group of engineers. The bribes, taken by Chen Chi-ching, an assistant manager, amounted to NT$230 million (US$7.7 million). Investigators said that Chen reportedly asked raw material sellers to pay him between US$7-40 for every tonne of gum Nankang bought.

Chen, and his wife who is allegedly his accomplice, seem to have lived modest lives, but when investigators searched his house, they found large amount of bank notes on the building's second floor. An investigation into the allegations was launched in May this year when Nankang notified legal authorities that one of the company members appeared to have taken bribes.

Nankang's honorary chairperson Lin Shur-pu is said to be manipulating the company's finances to keep its stock prices increasing despite the current crisis, but Lin was also involved in a scandal in 2000, when he was buying bankrupt Kuofong Group. Illegal transactions worth an estimated NT$300 million (US$10 million) were found to have been made in connection with the Kuofong case.

The new revelations came less than six months after Lin was released from jail on parole, leading some commentators to suggest that there may be a culture of corruption at the company.

Nankang pays more for its raw materials than its competitors, making its gross margins lower than its competitors.