The Council of Labor Affairs (CLA) admitted yesterday its decision to extend NT$440 million loans to 1,105 laid-off workers five years ago was a financial blunder.
"It was a miscalculated policy and was later suspended," said Lee Lai-hsi (
"Unfortunately, taxpayers may have to pick up the tab if debtors refuse to pay back the loans," Lee added.
In 1998, the CLA allocated money from its unemployment relief fund to offer a low-interest, five-year NT$500,000 preferential loan to laid-off workers who wished to start their own businesses.
A total of 1,105 people applied for the loans including 539 employees from Fu-chang Electronics Co (
Radical protests staged by former Lien-fu employees, who laid themselves across railway tracks, made newspaper headlines at the time.
State-run Hua Nan Commercial Bank (
But Huang Woun-ju (黃婉如), a Taoyuan County councilor, yesterday said that more than 300 debtors told her that they believed there existed an unwritten understanding that they didn't have to pay back the loans.
"Some argued that they were told that the government would claim the money from their former employers, who failed to pay salaries and unemployment compensation after the businesses closed," Huang said.
According to a Chinese-language media report, 711 people in total have defaulted on those loans, generating more than NT$270 million in non-performing loans, while the remaining 394 people paid them in full.
Lee said that Hua Nan will take the necessary steps to reclaim the money.
But Tseng Mao-shing (
He said that there is no way that the government can claim the money, since a loophole existed to allow the employees to take advantage of the no-collateral-needed preferential loans.
"The loans were destined to turn sour," Tseng said.
Moreover, Tseng, who was later appointed as a national policy adviser by President Chen Shui-bian (
Tseng yesterday threatened to take the debtors to the streets again, should the government take legal action.
In response, CLA's Lee questioned the legitimacy of the yet-to-be-launched demonstrations by Tseng.
"There's no free lunch in this world," Lee said, "Debts are meant to be paid."
Lee urged loan debtors not to risk their future credit rating for a meager NT$500,000 loan.
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