Wed, Jun 13, 2018 - Page 8 News List

The Liberity Times Editorial: FSC’s Koo living up to expectations

The long-standing battle over the management rights of CHB is the most notable example. The Ministry of Finance has insisted that an agreement made after a share sale in 2005 regarding CHB board seats was no longer binding and has won several lawsuits to that effect, but it obstinately continues to appeal those that did not, even though that has a negative effect on its international reputation.

This has shown that financial authorities are unwilling to let go of private banks and has highlighted the extremely limited progress of financial liberalization.

Based on fundamental corporate governance, when the government holds shares in financial institutions, it is a shareholder, and as such, it should only act as a shareholder and only enjoy the rights and benefits of shareholders, and it should not have any powers beyond that.

State-run businesses tend to be less efficient than privately run ones. The government should not consider itself omnipotent and interfere in the management of businesses, and high-ranking officials must bear in mind that with rank comes power, but not necessarily expertise.

In the “provincial banking system” before the Taiwan Provincial Government was reduced to near-nominal status, chairpersons and board directors were required to attend question-and-answer sessions at the provincial assembly. For these officials, traveling between the Taipei headquarters of their banks and the provincial assembly in Taichung’s Wufeng District (霧峰) was time-consuming, as well as harmful to their management duties.

To make things worse, elected representatives interfered with the management of banks, using supervision as an excuse, and this eventually evolved into malfeasance such as influence peddling and renovating, purchasing and renting buildings owned by banks, as well as excessive loans.

Even though the provincial assembly no longer exists, inappropriate interference by the government through its stakes and from the executive and legislative branches, as well as the exploitation of power for personal benefit, will continue to hinder the healthy development of Taiwan’s financial system. From this perspective, the lack of transitional justice means that Taiwan’s financial system is still unable to free itself from the shackles of political power.

Another reason Koo deserves applause for his statement is that it marks a resolute reversal of the long-standing government malfeasance due to the clique culture. There have been many cases of retired government officials taking cushy, well-paid jobs in government-invested banking institutions or organizations peripheral to the financial authorities to bypass the revolving-door policy stipulated in the Civil Servant Work Act (公務員服務法) before going to private banking institutions and businesses.

Even worse, financial authorities know of this practice, but have been unwilling to rectify it, because the people involved are often their seniors or former managers.

Moreover, by not correcting the situation or even facilitating such transfers, they might enjoy the same benefits in the future, thus forming an “accomplice structure.” The consequence is the financial clique.

As an outsider, Koo does not have to think about his career and he is determined to break the old habits and implement thorough reform. Reform requires determination, and as long as the person in charge does not work for private gain, focuses on the problem and the duties of their position and leads by example, the implementation of reform does not have to be as complicated as it might seem.

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