Mon, Nov 20, 2006 page3

• Analysis: Poor oversight led to `state affairs fund' controversy

  NOTHING NEW Taiwanese leaders have tapped into secret funds for more than 50 years by submitting claims, not receipts, to show how the money had been spent

  • By Ko Shu-ling / STAFF REPORTER
  • • 
    • 
    • 

  The controversy involving President Chen Shui-bian's (陳水扁) alleged misuse of the "state affairs fund" highlights the poor design and oversight of the special expense funds used by government officials.

  In a televised address two days after the indictment of his wife, Chen complained that the regulations governing the presidential "state affairs fund" were vague and confusing.

  He also called for clear and comprehensive rules regarding the use of the fund.

  Unlike Vice President Annette Lu (呂秀蓮) and Taipei Mayor Ma Ying-jeou (馬英九), who have their own "special allowance funds," Chen draws from the discretionary "state affairs fund."

  The name and nature of the president's special expense fund have changed over the years, causing confusion not only for accountants but also for presidents.

  Two special expense funds for the president -- a "secret fund" and a "special fund" -- were established in 1949. The two funds were merged into one called the "state affairs fund" in 1963. In 1992, the fund was renamed the "special expense fund" and then changed again to "secret fund" in 1995.

  Two internal Presidential Office documents from August 1952 provide the first evidence showing that the secret portion of the president's "state affairs fund" was handled through a separate account.

  However, that portion of the fund was not disclosed in the Presidential Office's budget statement.

  Since the fund's inception in 1949, expenses drawn from its secret portion have been reimbursed with claim forms explaining how the fund was used, while expenses from the non-secret portion have been reimbursed with receipts or invoices.

  All the slips and receipts were kept at the Presidential Office's accounting department.

  In 1997, the Ministry of Audit agreed to let the Presidential Office handle the fund in accordance with Article 44 of the Audit Law (審計法). The article states that the Presidential Office does not have to provide claim forms for classified expenses if the situation is "special" and if the office obtains the consent of the accounting and auditing agencies.

  In a bid to more transparently manage the fund, Presidential Office Deputy Secretary-General Cho Jung-tai (卓榮泰) said the Presidential Office instituted an internal rule in 2003 -- and amended it in September -- that states that the president must produce receipts in order to use the "special state fund."

  Any funds distributed to individuals involved in sensitive tasks such as diplomacy, military affairs or cross-strait issues are handled in accordance with the Classified National Security Information Protection Act (國家機密保護法), Cho said.

  The change made in September came in the wake of corruption allegations swirling around the first family and the president's aides.

  Acting on the claim made by fashion designer Ligi Lee (李慧芬), who alleged in June that the Presidential Office submitted fake receipts to gain reimbursement from the fund, the Ministry of Audit sent auditors to the President Office to investigate the fund's use.

  After four visits in two months, the ministry reported to the Taiwan High Prosecutors Office in July that it suspected the Presidential Office of misusing the fund.

  The ministry also reported to the Control Yuan, complaining that the Presidential Office had obstructed its auditing process by refusing to provide documents it deemed sensitive and confidential.

  The ministry also said it was innappropriate for the Presidential Office to assign someone who was not a certified accountant to handle the special account.

  The Directorate General of Budget, Accounting and Statistics (DGBAS), however, has a different view of the nature and function of the fund.

  DGBAS defined the fund as a "special fund" and "secret fund" and as such it is not necessary to produce receipts or invoices if the fund is used for confidential purposes.

  Accounting and Statistics Director-General Hsu Jan-yau (許璋瑤) said his department did not send auditors to check on the use of the fund because it "trusted and respected the national leader."

  Chen has said that it was unfair to hold him accountable for the fund's poor controls since he merely followed the practice exercised by his predecessors.

  Shih Cheng-feng (施正鋒), a professor at Tamkang University's Department of public administration, agreed that Chen should not be held solely responsible for the ill-designed system, but the administration should have taken the initiative to change the modus operandi as soon as it discovered the flaw.

  It did not make sense, however, that the head of the state should go without a special allowance fund while other government officials use them, he said.

  As Chen has complained that even government officials are confused about the nature of the fund and that nobody had explained how to use it, Shih said the Ministry of Audit should be held responsible for "procedural errors" relating to the "state affairs fund."

  "While President Chen only oversees policies involving the funds, the relevant accountants are in charge of how the cash is handled," Shih said. "Many of the nation's problems lie in the lack of institutional transparency and legal mechanisms."

  Philip Yang (楊永明), a political science professor at the National Taiwan University, however, said Chen was trying to turn a legal issue into a political one when he compared his use of the fund to that of his predecessors.

  Even if part of the fund was normally used for clandestine diplomatic undertakings, it still should have been placed under legislative oversight, he said.

  Yang's comments cast doubt on Chen's argument that presidents should have business expenses at their disposal because they set foreign policy rather than execute it.

  also see story:
  

  Editorial: Friedman's straightforward legacy

  Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.
• Most Popular

  • 1

    Consumer group urges action on illegal e-bikes

  • 2

    Why China would not take Taiwan

  • 3

    US begins highest-level visit in decades

  • 4

    Tsai meets Azar at Presidential Office

  • 5

    US’ Azar applauds Taiwan before visit