MOFA denies using company's assets as source to fund illegal diplomacy

The Ministry of Foreign Affairs yesterday denied that it was illegally using funds from a Hawaii-based private company owned by the ministry.

The ministry admitted to operating the Songhe international estate Corp (松鶴地產公司), a private estate company, after KMT Legislator Sun Kuo-hwa (孫國華) accused the ministry of using the company's assets to fund diplomatic initiatives.

Sun said yesterday that he suspected that the ministry was operating the company and using its profits for illegal purposes.

Sun said that five of the company's six board members are officials with the ministry, but the ministry had failed to reveal any details about the company.

Responding to Sun in the Legislative Yuan, Minister of Foreign Affairs Eugene Chien (簡又新), clarified that the ministry had reported Songhe's operation to the legislature last year.

"Songhe is not being used as a source of funding," Chien said.

Sun said that the government bought Songhe for US$10 million in 1979. Songhe currently owns 11 buildings, and has NT$250 million worth of liquid assets in Hawaii.

"It's not clear where Songhe's money goes. I am wondering why the ministry is hiding this," Sun said in the Legislative Yuan yesterday.

The ministry is required to list the company under Article 20 of the State-owned Properties Law (國有財產法) as part of its overseas properties.

The ministry yesterday explained that it failed to list the company because of tax concerns.

"Listing the company as one of the government's official operations would require paying as much as 40 percent income taxes to the Hawaiian government, which might damage the ministry's interests.

"Based on this important concern, we decided not to list the company," the ministry's press release said.

"But to normalize the company's operations, we have decided to sell the company, after the Cabinet approved the proposal last November. The company is up for sale now," the press release said.

In the press release, the ministry explained that the company's purpose was to assist the operations of the overseas Chinese affairs' organizations in the US after the US broke off diplomatic relations with Taiwan.

Sun also said that when ministry officials took positions as company board members they violated Article 13 of the Civil Servant Services Act (公務員服務法), which states that civil servant are banned from operating private companies and cannot serve on a company's board.

The ministry said that the positions of board members are conferred upon its officials legally, and none of the officials receive payment for their work on the board.