George Quek turns to trade pact to resolve Pacific Sogo woes

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

Mr Quek had told The Business Times that he 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 Pacific Distribution Investment. Pacific Distribution Investment's main asset is Pacific Sogo Department Stores, which has stores in both Taiwan and mainland China.

The deal would see Singapore-incorporated firm Clover that is used to make the acquisition own more than 50 per cent interest in Pacific Sogo, giving Clover the management and controlling rights, according to Mr Quek.

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

Register of the Ministry of Economic Affairs does not show Mr Lee's name among Pacific Distribution's major shareholders.

Through PricewaterhouseCoopers Legal in Taiwan, Clover issued a media release on Oct 2 in response to Pacific Distribution's statement made a day earlier. It announced that it is proposing to seek recourse from Taiwan's Ministry of Economic Affairs under an agreement between Singapore and Taiwan.

The agreement that Clover mentioned is the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu On Economic Partnership (Astep). It came into effect in 2014 and aims to open up opportunities for Singapore companies doing business in Taiwan as well as with Taiwanese companies.

Clover stated the Taiwan courts had ruled that documents on earlier capital increase in Pacific Distribution Investment by Taiwan-listed conglomerate Far Eastern Group were "false". However, the Ministry of Economic Affairs had failed to rectify its register to reflect the "true" shareholding of Pacific Distribution. Hence, the ministry has undermined Clover's rights by failing to rectify its register.

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