There have been several financial scandals in Taiwan over the past two years or so. From the XPEC Entertainment Inc case to that of Mega International Commercial Bank, SinoPac Financial Holdings Co, Ching Fu Shipbuilding Co, First Commercial Bank, Far Eastern International Bank and Farglory Life Insurance Co, one financial scandal has erupted after the other.
With great effort from all sides, Taiwanese banks finally received a positive review from the Asia/Pacific Group on Money Laundering in its evaluation of anti-money laundering practices last month. As for how the country can encourage the good and jettison the bad, perhaps it could learn something from other countries’ experience.
The financial industry has always been a pillar of the Australian economy. In response to the raising of international financial supervisory standards in recent years, the Australian Royal Commission boldly and decisively launched an overall examination of financial institutions.
Through the commission’s investigation, the Australian banking industry was found to have four major flaws. First, relatively high-risk financial advice was being provided to clients. Second, illegal loans were being granted based on inaccurate or incomplete applications. Third, interest rates were being influenced — all the leading Australian banks stand accused of manipulating base rates. Fourth, anti-money laundering and counterterrorism financing mechanisms were being contravened.
The Commonwealth Bank of Australia even failed to report more than 53,000 suspicious transactions to the authorities.
In its report, the commission severely criticized the Australian financial sector for complacency and for turning a blind eye to high risks, which led to serious examples of misconduct.
When a financial scandal breaks out, an enterprise needs to deal with consumers’ compensation claims and investors’ loss of confidence.
Since the public sector in Taiwan does not face the pressure of immediate compensation claims or a loss in market value, government agencies often act injudiciously when handling serious misconduct or accidents. Top officials hardly ever take action, other than to bow, apologize, resign or look for a scapegoat.
This is exactly how the Taiwan Railways Administration handled the Puyuma Express derailment in October. As the organization of the agency remains unchanged, the same problem is sure to repeat itself.
When technology was less developed, this method might have been temporarily effective, because people forget. However, with the advent of the Internet, various incidents caused by organizational disorder are constantly mentioned in election campaigns.
Although the government does not need to face any investor or consumer directly, it does need to face voters. If it does not propose a plan for reform, and show its determination and capability to change, the government is destined to be replaced.
After facing heavy punishment and a strong demand for internal reorganization, the Australian financial industry has learned a lesson: Non-financial risk management is as important as financial risk management.
Soon after a scandal occurs, an organization should be required to propose a timetable for reform and be pressured to adhere to it strictly, so as to root out its bad habits and change its corporate culture. This applies not only to the government in the public sector and businesses in the private sector, but also to the “third sector,” including organizations such as national universities, hospitals and foundations.
Carol Lin is a professor at National Chiao Tung University’s Graduate Institute of Technology Law.
Translated by Eddy Chang
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under