How The Malaysian USB-Inventor Got In Trouble In Taiwan

The Malaysian who created the world’s first pen drive, Datuk Pua Khein Seng, was sentenced to two years jail by a court in Taiwan.

According to Taiwan media Liberty Times, the famed inventor made false company reports and announcements under Article 171 of the Securities and Exchange Act.

Accordingly, courts say the chairman of a well-known memory chip maker had instructed his subordinates to falsify accounting transactions between 2009 and 2014.

Pua was also sentenced to a one year and 10 months jail term for the offence of making false entries in a civil servant’s report.

The Taiwan Hsinchu District Court on Oct 29 sentenced Pua to two years imprisonment for violating the Securities and Exchange Act.

Malaysian Pua Khein-Seng, a pioneer of pen drive technology, is facing two years imprisonment in Taiwan for allegedly misrepresenting the financial reports of Phison Electronics Corp to regulatory authorities.

Pua is the chairperson of Phison Electronics Corp which produces controllers for NAND flash memory chips used in flash drives and solid-state drives.

Phison, responding to the judgment in a material announcement, said Pua will appeal the decision of the case which first surfaced in August 2016.

“Pua presents his regret for the judgment and will discuss with attorneys to determine corresponding matters and appeal this case to the court of the second instance,” it said in the announcement.

Phison, in a separate statement yesterday, said Pua had made “special business arrangements” with the company as he controlled multiple companies and was trying to respond to severe competition and the 2008 financial crisis.

It added that the arrangement was for Phison’s long-term development, and he had no motive to damage or cheat Phison.

It stressed that ultimately, Phison did not suffer any damage.

“In 2014, since Pua had first knowledge that he may have violated the law, he voluntarily appeared in governmental authority and actively cooperated to the investigation.

“In mid-2016, Pua further voluntarily appeared in governmental authority the second time to answer follow-up investigations and promised to produce required evidence,” it said.

Phison maintained it had redone its financial report and no abnormality was found.

“After the beginning of Phison’s financial case, financial supervisory authority instructed Phison to re-prepare financial reports, and the result was that Phison’s shareholders’ equity was not changed.

Phison said its board is backing Pua and wants him to continue in his role.

“Phison’s board members have had discussions to the court judgment, and they all support and ask Pua to continue to implement his duties to lead the company.

“Therefore, for the company’s overall interest, Mr Pua will appeal the judgment to the court of the second instance and will continue settlement discussions with Securities and Futures Investors Protection Center,” it said.

How it went corrupted

The case was first investigated in August 2016.

When the case was closed in August the following year, the public prosecutor’s office decided to suspend the prosecution and impose a penalty of NT$110 million (RM16.3 million).

They deemed that Pua had no previous convictions and did not make any illegal profits. 

The case was sent to the upper level of the public prosecutor’s office for review, but they considered the investigation incomplete and requested further investigation. 

The prosecutor’s office later concluded that Pua had violated the Securities and Exchange Act.

The investigation found that Pua – to use funds freely and reduce the financial cost of the company he set up – came up with the idea of transferring the funds to his Hong Kong subsidiary.

He then instructed his staff to arrange false transactions from 2009 to 2014, resulting in inaccurate accounting, bookkeeping and financial statements of his company.

In addition, Pua was sentenced to two years imprisonment for the offence of misrepresenting declaration and announcement under Article 171(1)(1) of the Securities and Exchange Act.

Pua said in a statement yesterday that he had not yet received the verdict and has yet to find out the reasons for the jail sentence and the fine imposed on him. 

He added that his company would continue to operate as usual and not be affected by the verdict.

A simple Malaysian from Klang

Pua is from Sekinchan, Selangor and was born in 1974. He came from a modest family and attended Pin Hwa High School, Klang. He went to Taiwan at the age of 19 to study at the Chiao Tung National University.

He covered his tuition fees by doing part-time work throughout his three years studying at Chiao Tung. 

But he earned a meagre NTD 80 (RM8) per hour, and almost couldn’t pursue a master’s degree for lack of money. 

Thankfully, his perseverance paid off. His teachers at Chiao Tong University also recognised his talent. 

After earning a master’s degree, he taken in by one of the professors to work as a memory controller researcher. 

Soon after, he left the company over office politics and internal shortcomings.

Pua (middle) receiving a recognition from former minister and Gerakan president Datuk Seri Dr Mah Siew Keong (left).

Formatting his own company

His skills and determination continue to gain attention, and he was offered a lead role in another company. 

At the time, shareholders were sceptical of the start-up and refused to provide the financial support he and his partners needed.

Not giving up, Pua and his friends raised NTD 6 million (RM893,000) from their relatives, friends and personal savings. As a result of their efforts, Phison Electronics was founded by him and four others in November 2000.  He was 27. The company became famous after producing a 5-in-1 card reader. 

In 2002, their renowned pendrive invention debuted.

This simple data stick changed the world forever. Previous data storage devices (such as disks) were impractical due to limited storage capacity. 

Although USB storage devices have been researched and manufactured in Israel and the United States, he came up with the first single chip USB flash memory storage device.

Phison left a deep impression in the industry and attracted investments from giants such as Toshiba and M-systems.

Pua is currently chairman at Phison. He also owns several other companies.

To this day, Phison continues to provide the latest storage solutions, including embedded NAND flash memories for cars.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s