UPDATE 1-Court bars AU CEO from leaving U.S. in LCD probe

* Lawyers say he needs to travel to fulfill duties

* Judge says Lai-Juh Chen needs court permission first

* Taiwanese govt supported travel request -defense lawyer
(Adds details on Taiwan government, lawyer’s comments)

By Dan Levine

SAN FRANCISCO, Aug 20 (BestGrowthStock) – 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. [ID:nN10251460]

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.”

They said in a court filing Chen could be replaced if he
were unable to fulfill his key job functions.

But 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.

WEB WIDENS

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 Taiwanese 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.

“I would welcome the Taiwan government to agree to
extradite my client in the event he failed to appear,” Berson
said.

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.

Attorneys for Chen have argued he is a man of integrity who
enjoys an “excellent reputation” in the Taiwan business
community. He is not a flight risk, they said.
(Editing by Edwin Chan, Robert MacMillan and Matthew Lewis)

UPDATE 1-Court bars AU CEO from leaving U.S. in LCD probe