Sale of AIG Taiwan Unit Grows Tense

New York, NY (TheStreet) -- In another move that could potentially slow AIG's(AIG) efforts to sell its Taiwan unit, some lawmakers in Taiwan are accusing a group of Hong Kong buyers of being a front for mainland Chinese interests, the Wall Street Journal reports.

Taiwanese legislation stipulates that companies with 30% or more of their money being funded by mainland China cannot buy into a Taiwan financial firm.

Taiwan's Ministry of Economic Affairs is reportedly investigating whether the Hong Kong consortium of buyers is being backed by mainland China investments. The Hong Kong consortium, consisting of Primus Financial and China Strategic Holdings, has been seeking to acquire about a 98% stake in Nan Shan, the AIG unit.

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The consortium alarmed Taiwan officials last week when it announced its intention to sell a 30% stake in Nan Shan to Taipei-based credit-card issuer Chinatrust Financial for a 9.95% China Strategic stake in Chinatrust. A China Strategic spokeswoman says that the deal would allow Chinatrust the option to raise its stake in Nan Shan over a three-year period, the South China Morning Post reports.

Two people close to Chinatrust say that the company now wants the majority control of Nan Shan, according to SCMP.