August 21, 2010 / 3:52 AM / 7 years ago

Court bars AU CEO from leaving U.S. in LCD probe

SAN FRANCISCO (Reuters) - The CEO of the world’s fourth-largest maker of liquid crystal displays has been barred by a federal judge from leaving the United States as Justice Department officials pursue price-fixing allegations against the company.

A grand jury indicted Lai-Juh Chen, chief executive officer of Taiwan’s AU Optronics Corp (2409.TW) (AUO.N), in June for fixing prices of thin-film LCD panels, which go into everything from TVs to smartphones. The court ordered him to surrender his passport this week.

The U.S. Justice Department has accused AU Optronics executives of participating in a group of industry officials who met regularly in Taipei hotel rooms and restaurants to discuss and agree on prices, from 2001 to 2006.

Six companies had pleaded guilty in the subsequent probe, including Taiwan’s Chi Mei (3481.TW) and Chunghwa Picture Tubes Ltd (2475.TW), South Korea’s LG Display (034220.KS) Co Ltd, and Japan’s Sharp Corp (6753.T), Epson Imaging Devices, and Hitachi Displays.

After Chen pleaded not guilty in San Francisco last month, his lawyers argued that as the case proceeds, he should be allowed to travel between the United States and Asia to attend important meetings.

“One such meeting is scheduled in September with top officials of customer LG Electronics (066570.KS) in Korea,” his lawyers wrote. “If Dr. Chen was unable to personally attend these meetings as CEO, it would be more difficult for AU to conclude agreement with customers or, potentially, it could risk losing substantial business to competitors.”

In Taiwan, an AU Optronics publicist said the firm’s business would see little impact from the case as many of Chen’s senior deputies remain on the island.

U.S. District Judge Susan Illston ordered Chen and AU’s vice chairman, Hsuan Bin Chen, to surrender their passports this week, court records indicate.

“Defendants shall not travel outside the Northern District of California” without the court’s permission, Illston wrote. The district stretches from San Jose in California north to the Oregon border, and includes San Francisco.

However, Illston quickly approved Chen’s request to take a brief domestic trip to Atlanta and Tennessee.

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Prosecutors obtained indictments against four other current and former AU officials, along with the company itself. Another one of those executives now barred from leaving the United States is Hui Hsiung, CEO of Qisda Corp, a Taiwanese manufacturer of electronics components including LCD monitors.

A handful of representatives from the Taiwan government attended Hsiung’s court hearing to show support for his international travel request, his attorney Brian Berson said.

But prosecutors argued that Hsiung and the other AU executives were flight risks, given the lack of an extradition treaty between the United States and Taiwan.

The United States switched diplomatic recognition from Taipei, capital of self-ruled Taiwan, to Beijing in 1979.

Hsiung was disappointed with Illston’s ruling, which may force him to resign from Qisda, his lawyer said.

So far, 17 executives have been charged in the LCD probe, and the six companies that have pleaded guilty have paid fines totaling more than $860 million. Many executives have pleaded guilty, and their prison sentences usually last a few months.

The AU personnel appear to be the first to declare their innocence and fight the charges.

AU said in July it saw no material impact on company operations from the indictment, and, denying the charges, pointed out that prices for thin-film LCD panels had fallen steeply in past years. A U.S. lawyer for AU Optronics, a major supplier to the likes of Dell Inc DELL.O, Hewlett-Packard (HPQ.N) and Sony Corp (6758.T), declined comment on Friday.

Editing by Edwin Chan, Robert MacMillan and Matthew Lewis

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