Trusts are not the complete answer

The KMT's presidential candidate Lien Chan (連戰) recently announced that he would leave the party's property in trust if elected. No matter what moti-vated Lien to make such an announcement, the solution is good, even though there is still a long way to go before the KMT resolves the problems of the so-called party property and party-run businesses (黨營事業).

Why is it a good solution? We know that political parties are not supposed to engage in profit-making. The reason is simple.

According to the seventh article of the "Public Functionary Assets Disclosure Law (公務人員財產申報法)," the governor, all mayors and elected officials at the provincial assembly or city council level or above, as well as their spouses and underage offspring, must report their assets (including real estate and stocks) and put them into a compulsory trust.

The article is aimed at preventing policy-makers from profiting from insider trading. As the ruling party has more direct power in policy-making than the legislature, it certainly should be prevented from operating its own businesses.

Over the past decades, this simple question has been raised from time to time, but the answer has always been: the party-run businesses are privately-owned so they are supposed to be protected by the country, and political parties' financial resources are not controlled by conglomerates and so on.

But in fact party-run businesses have hindered the KMT from adopting the best financial policy (a free market policy is contradicted by the privileges given to party-run busi-nesses); the large profits of party-owned businesses are the major obstacle obstructing democratic politics and fair competition between political parties; and they are also at the core of "black gold" politics (黑金).

In short, party-run businesses are the cancer damaging Taiwan's politics and economy.

From this viewpoint, by his declaration Lien is identifying himself with the notion that "political parties should not engage in profit-making." Such an announcement is a milestone in the search for a solution to Taiwan's party-run businesses.

But the bigger question is whether putting the party's property into a trust will really resolve the problem.

A trusteeship does not resolve every problem. Nor is it easy to carry out. The "Public Functionary Assets Disclosure Law" went into effect in July 1993. Up til now, assets reports have been made public but the regulation about compulsory trusts has never been carried out.

Why can't the trust regulation be implemented? Some say it is because we do not have related laws to follow. Then why not pass some?

The answer is the legislature. Who will pound his or her own feet with a brick? If Lien is elected the next president, do you believe legislators will agree to pound their feet with bricks?

Putting a party's assets into trust won't solve all the prob-lems, as there are other issues.

First, what is a "party business?" If the China Development Industrial Bank (中華開發銀行) can't be counted as a party-run business -- even though it is controlled by Liu Tai-ying (劉泰英), chairman of the KMT's Business Management Committee -- then does it make any difference to put the party's assets in trust?

It is not likely that the KMT will admit the bank is a party-run business, especially when the party is still in power.