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Wed, Mar 01, 2000 - Page 9 News List

Will the KMT ever be separated from its business assets?

Lien Chan's promise to put the KMT's vast business empire in trust has been widely shrugged off by the electorate as an election promise the ruling party will never deliver on. What needs to be done if the promise is to be kept

By Liu Shih-chung

Elections often compel politicians to make some unfulfillable promises to voters and this has been the case in the current presidential election campaign.

In an effort to show voters how reform-minded he is, Vice President Lien Chan(連戰), the KMT's presidential hopeful, pledged on January 2 that the ruling party should put all the assets of its party-owned enterprises into trust, thus arguably -- since the method of the entrustment and the use of its funds has not been specified -- volunteering to deprive itself of the source of much of its power.

Lien's move generated surprise, but also suspicion regarding the extent to which he could actually follow through on his promise. Subsequent opinion polls, in fact, showed that most voters considered Lien's announcement as nothing but an election ploy while debate over the relative laws governing party assets in the Legislative Yuan also gave the strong impression that the KMT was trying to get a name for reform while leaving the law relating to such matters conveniently ambiguous.

This is the typical "Lien-speaks-first-while-his-subordinates-do-the-rest" trick of which Lien's camp has been playing repeat performances. This involves Lien's making promises to voters worth billions of dollars without telling those of us who are aware how tight the government's budget really is where the extra money is going to come from.

The KMT is the only political party in Taiwan that owns and runs a huge business empire. It is also the richest political party in the world.

Possession of the assets in itself is not a sin, but there are a great many questions as to how these assets have been acquired; whether, for instance, they involve the illegal transfer of money, property or commercial interests from the party to the government or vice versa.

When the KMT moved to Taiwan in 1949 it had only one party-owned enterprise and less than US$1 million in cash. But after 55 years of rule in Taiwan, the KMT now owns seven stock-holding companies, 27 party-owned enterprises and more than 400 party-invested companies. The value of the KMT's assets is estimated to be between NT$200 billion and NT$500 billion. According to a new book published by Wealth Monthly (財訊月刊), the KMT's total assets amount to NT$600 billion.

How did the party accumulate these assets? Usually by one of three methods.

The first, which provided the basis of the KMT's financial stability in its early days in Taiwan was the simple takeover of property formerly owned by the Japanese government during the colonial period or the purchase of formerly Japanese government-owned assets at an artificially low price.

In later years it benefitted from the symbiosis between the government, which awarded lucrative development contracts, and KMT companies which received them.

More recently it has used its own financial power, along with its government connection, to manipulate Taiwan's financial markets via insider trading and rumor-mongering via the media. It is ironic that in its government role the KMT stresses financial market stability, whereas in its business dealing the KMT generates market instability -- sudden rises, sudden plunges -- through which it can earn huge profits as well as launder payouts for various favors

What are the major implications of the KMT's possessing such vast wealth?

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