Posted Monday, February 16, 2004; 21:00 HKT
In his wire-rimmed glasses and crisp white shirt, Daniel Tsai, co-CEO of Fubon Financial Holding Co. and scion of one of Taiwan's richest families (estimated net worth: $1.8 billion), appears about as controversial as a high-school principal. The Georgetown University-trained lawyer spends his most adventurous days playing golf, and in his rare moments of free time away from his elegant office overlooking eastern Taipei, he reads management books by the likes of Jack Welch. "It's a little like doing homework," he says. "People expect you to know what the great Jack Welch is saying."

But in the pages of Taiwan's raucous press, the unassuming 47-year-old is typically cast as a corporate snake. In one much publicized spat in October, politicians accused him of wining and dining Taipei's mayor in private clubs to secure a sweetheart sale on city-owned shares of TaipeiBank that Fubon acquired in late 2002. In January 2003, the labor union of Chunghwa Telecom protested outside Taiwan's Ministry of Transportation and Communications against Fubon, which had just bought with a partner 13.5% of the state-owned company in a government auction. The protest was sparked in part by a report, issued by a legislator, that accused Tsai of striking a secret deal with Taiwan President Chen Shui-bian's office to freeze out other bidders. Tsai and Fubon deny any wrongdoing, and there's no reason to believe he did anything questionable in either of these controversies. But such batterings have left Tsai longing for the past. "We can't always have things the way we want them anymore," he says. "We are really coming under scrutiny from all sides."

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These days, that's increasingly standard for Asia's corporate titans, who now find their actions and motives routinely questioned and maligned. But the Tsais have responded boldly by adopting dramatic reforms to assure investors that their publicly traded company is competitive and transparent. In 2002, the Tsais established an independent, U.S.-style audit committee to keep a close watch on Fubon's books. In May, Daniel stepped down from his chairmanship at an insurance unit, and now he holds no posts at Fubon Financial's many affiliates except at newly acquired TaipeiBank. His official corporate duties are focused mainly at the holding company, where he shares the chief-executive job with his 46-year-old brother, Richard. Their 74-year-old father and Fubon founder, Tsai Wan-tsai, has resigned all of his posts.

The company has even overhauled that last bastion of family control, the boardroom. Fubon's current chairman is a former deputy central-bank governor—decidedly not a Tsai-family member. In the past few years, Fubon has forged an alliance with Citigroup, which holds an 11% stake and also has a board seat, further ensuring that the company isn't run for the benefit of its founding family—even though family members continue to own a 12.61% stake. "The trend for corporate governance is the trend of globalization," says Tsai. "Our practices have to be modeled on what is generally accepted internationally."

Not that the Tsais' record as managers necessarily invites investor distrust. The company was born in 1979 after Tsai Wan-tsai's oldest brother had a stroke and parceled out the family's finance empire among his two brothers and three sons. Wan-tsai ended up with a small casualty-and-property-insurance affiliate that eventually became the base of Fubon. Today, Fubon has affiliates in banking, securities, life insurance, fund management and real estate. Fubon, Taiwan's second-largest financial-services group, with assets of $37 billion, earned $419 million in after-tax profit on revenues of $4.6 billion in 2003. The company is looking to get even bigger. Late last year, Fubon announced it was pursuing a merger with smaller crosstown rival SinoPac Holdings Co., a banking-and-securities group. Fubon also has plans to take on the Chinese insurance market.

Amid all the change, the Tsais do try to hold on to some of the family's business rituals. Tsai Wan-tsai still comes to the office daily, and he, Richard and Daniel meet for lunch every Monday to discuss Fubon's business. The two brothers speak several times a day by phone or in person, and because their apartments are in the same building, evening and weekend chats are also frequent. "I go to see him in my slippers and pajamas—it's that kind of relationship," says Richard. No longer, however, can the pair plot a course for the company without the world looking over their shoulders—and sometimes jeering. "I'm coming to the realization that no matter how professionally I work," says Daniel, "I will never be seen as a professional manager." Indeed, with the Tsais' role diminishing, those tête-à-têtes may soon be a thing of the past.

—By Michael Schuman. With reporting by Joyce Huang and Donald Shapiro/Taipei