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Editorial: President Chen, know thyself

The sale of Taiwan Development Corp stock by government-owned Chang Hwa Commercial Bank to the family of Chao Chien-ming (趙建銘) -- the son in law of President Chen Shui-bian (陳水扁) -- was the talk of the town last week. The negative impact of the affair is, of course, aggravated by the fact that the general public had just moved their attention from a series of controversies surrounding the first family to more important matters when this latest round of allegations erupted, prompting immediate investigation by the prosecutors' office.

Things have gotten so bad that just about the only thing the ruling Democratic Progressive Party (DPP) can do is to draw a line between itself and the Chao family so that the party won't be blamed or held accountable for the incident. This "damage control" has included a string of public announcements by DPP politicians openly condemning the conduct of Chao and his family. However, the chances of that tactic working are pretty slim. The main reason is not because Chao is still a DPP member -- Chao quit the party as soon as the saga broke last week -- but because of his relationship with the president.

As the leader of this country, Chen has to be held politically and morally accountable by his constituents for the behavior of his family members, even though both he and the first lady may have been completely ignorant of Chao's meetings with the management of Chang Hwa Bank and Taiwan Development Corp or the purchase of the stock by Chao's mother.

It should be pointed out that the stock purchase in question raises at least two issues -- one is legal in nature and the other ethical.

The stock purchase may constitute insider trading, which is a criminal offense. To qualify as insider trading, there are a couple of legal thresholds that need to be met. First, there is the question of whether any information was released to the general public by someone inside Taiwan Development Corp which could have had a significant impact on the price of the company's stock. Then there is the question of whether this release of inside information caused Chao's family to purchase the stock.

Convicting a person of insider trading is not that easy, since it involves determining the precise character of the information leaked and a causal relationship between the leaked information and the purchase. Still, even if Chao and his family are not guilty of insider trading, there is the ethical issue that cannot be overlooked. It should be remembered that the stock in question was not purchased on the open market.

While it was legal for Chang Hwa Bank to sell the stock to designated buyers, despite the fact that the sale price was the market rate one cannot help but wonder why the bank chose Chao and his friends. Reportedly, there were several groups of interested buyers. Many believe that Chao won out over the other contenders due to his relationship with the president. In other words, while the president may not have known a thing about the deal, his relationship with Chao may have been sufficient to earn the president's son-in-law preferential treatment. From this perspective, the president holds some level of accountability for the behavior of his extended family.

It seems that Chen did not entirely understand the implications of this affair for his political reputation. He issued two statements, one asking law enforcement officials to uphold the law -- implying that there should be no preferential treatment for anyone during investigations -- and a second apologizing to the general public for the incident. It would truly be sad for Chen and the country if the last two years of his presidency is remembered for a series of apologies made under such regrettable circumstances.
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