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KMT members want own inquiry

"Liu was attacked by the DPP for `scrambling for gains' ... But the KMT is now starting a struggle against him and branding him the `culprit hollowing out the party's assets'."

Grace Fang, aide to Liu Tai-ying

Just as the DPP government is making a high-profile move to prepare to probe into assets unlawfully obtained by the KMT, some KMT members have demanded the party start its own investigation into past alleged scandals involving KMT-run businesses.

In addition to former president and KMT chairman Lee Teng-hui (李登輝), another main target of this attack is the former business affairs manager and Lee's close associate Liu Tai-ying (劉泰英).

Liu, who headed the KMT's Investment and Business Management Committee for seven years starting in 1993, was once known as the best money-making treasurer in the party's history, filling up the KMT coffers with billions of new Taiwan dollars every year.

However, a number of controversial investment decisions made by Liu, that invited much public criticism in the past, are now also raising suspicions among some KMT members that Liu might have hollowed out the party's assets to line his own pockets.

"There was a long-term practice in the party that only a couple of people had the right to decide how the party's assets were to be dealt with. Besides them, no one had any idea what had become of the the party's huge assets or had any chance to interfere in the matter," said KMT Legislator Wu Den-yih (吳敦義.).

Wu said that the party must face up to the problem if it is to break with the past -- an "old era" dominated by Lee.

Liu, who has known Lee for more than 40 years and has Lee's complete trust.

The friendship between Lee and Liu started when Lee taught Liu economics at the National Taiwan University and became very close when they both pursued PhDs at Cornell University.

As leader of the Taiwan Institute for Economic Research, Liu became one of Lee's economic advisers in 1990 -- when Lee was the president -- and participated in the making of a number of economic policies such as the "go south" policy encouraging investment in Southeast Asian countries.

Under Lee's instruction, Liu established the Taiwan Research Institute (TRI) in 1994 as Lee's private think tank.

In addition, Liu signed a three-year contract with Cassidy & Associates, a lobbying firm, for US$4.5 million which was followed by Cassidy successfully lobbying in Congress to force the Clinton administration to grant a visa for Lee's US visit in 1995.

In the KMT, Liu, as chairman of the Investment and Business Management Committee, had seven party-run holding companies, with over 130 re-invested business, at his command.

Controversies, however, were never lacking during Liu's term, with a number of investment project terminations and party asset sales allegedly involving scandalous corruption.

One of the most discussed cases was the sale of a property on Jenai Road in Taipei, where the KMT-controlled Broadcasting Corporation of China was located.

The parcel of land was sold for NT$9 billion to the Hung Sheng Company (宏盛建設公司) in 1999, when the land was reportedly worth NT$12 billion.

Hung Sheng is a construction firm under the Hung Tai Group (宏泰集團), known for its close relationship with the KMT.

Also, many investment projects decided by Liu have proven to be big mistakes and are now suffering great losses. These include some overseas investment projects that were struck as part of a diplomatic maneuver to facilitate Lee's visits to countries with no diplomatic ties with Taiwan. They also include investment projects made to bail out troubled businesses owned by people with close connections to Liu or the KMT.

According to the KMT's financial statement for fiscal 2001, the total net value of assets held by the KMT-owned Central Investment Holding Company (中央投資公司) and Huahsia Investment Holding Company (華夏投資公司) was registered at NT$37.96 billion.

The number was NT$60 billion, or about 60 percent lower than in March 1993, right before Liu took over the chairmanship of the Investment and Business Management Committee.

In response to the suspicion, Liu argued that it is "normal" that some investment projects, which were assessed as worthy in the past, turn to losses with time.

Grace Fang (方鳳山), an aide to Liu, said it is unfair to put the blame on Liu and overlook the credit he did to the party, namely that he helped earn the party up to NT$70 billion during his term.

"Liu was attacked by the DPP for `scrambling for gains' when he made so much profit for the KMT in the past. But the KMT is now starting a struggle against him and branding him the `culprit hollowing out the party's assets,'" Fang said.
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