George Quek looking to S'pore-Taiwan trade pact to resolve Pacific Sogo acquisition woes

Singapore

BREADTALK founder George Quek is looking to a Singapore-Taiwan trade pact signed in 2014 to resolve the issues encountered in his recent personal acquisition of Taiwan's Pacific Sogo Department Stores.

Mr Quek and a long-time business partner had entered into a deal with Taiwanese businessman Lee Heng-lung to acquire the bulk of the latter's claimed 60 per cent stake in holding company Pacific Distribution Investment (PDI), whose main asset is Pacific Sogo Department Stores, which has a total of 12 stores in Taiwan and mainland China.

The deal would see Singapore-incorporated Clover - the vehicle used to acquire the PDI stake - own more than a 50 per cent effective interest in Pacific Sogo, giving Clover the management and controlling rights, according to Mr Quek.

However, PDI has disputed Mr Lee's shareholding via a media statement on Oct 1. The company stated that Mr Lee's equity-holding in PDI stands at only 0.15 per cent and is insufficient to cause management change.

Clover issued a quick rejoinder on Oct 2 - through PricewaterhouseCoopers Legal in Taiwan - refuting point-by-point PDI's statement.

Clover alleged that the documents on capital increase in PDI by Taiwan-listed conglomerate Far Eastern Group were "forged", thereby resulted in Mr Lee's stake in PDI being diluted to 0.15 per cent.

Mr Lee and Far Eastern Group were among the parties locked in a decade-long legal battle over control of the Pacific Sogo Department Stores.

Clover stated that the Taiwan courts had already ruled that the documents in question were "forged". However, Taiwan's Ministry of Economic Affairs had failed to rectify its register to reflect PDI's "true" shareholding.

Once the Ministry rectifies this register, Mr Lee's controlling rights over PDI would be reinstated, Clover said.

Clover claims the Ministry of Economic Affairs has "undermined Clover's interests" when it failed to make the rectification.

Hence, it would seek recourse from the Ministry under an agreement between Singapore and Taiwan.

Clover is referring to the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu On Economic Partnership (Astep). It came into effect five years ago and aims to open up opportunities for Singapore companies doing business in Taiwan as well as doing business with Taiwanese companies.

The pact provides for a mechanism to settle any disputes relating to the implementation, interpretation and application of Astep. This would allow Singapore and Taiwan to request such disputes to be resolved through arbitration.

However, either party has the opportunity to consult the other party as well and may also agree to alternative dispute resolution through good offices, conciliation or mediation.

Clover further disputed PDI's argument that the former lacks the capacity or right to pursue the matter. The company stated that it is the Ministry of Economic Affairs and not PDI that Clover will be dealing with under Astep.

The Singapore company said that after it takes over the management of PDI, it would do its level best to protect the interests of the latter's employees, vendors and consumers. This was in response to PDI's earlier claim that it reserves its legal rights against any "untruthful" news that affects the interest of itself and companies under the Far Eastern Group as well as their employees and stakeholders.