James Soong (宋楚瑜) is in trouble over mysterious funds of more than NT$140 million (now up to NT$240 million) in the accounts of his son and sister-in-law. For most people in Taiwan, the figures being bandied around are astronomical. A person earning NT$1 million a year, a reasonable middle-class income, would have to save every penny they ever earned for three lifetimes in order to amass such an amount. And yet the KMT still doesn't seem to be able to find where this money came from. In the KMT's boundless ocean of wealth, these sums are chicken-feed.
Given this wealth why should the KMT begrudge Soong, at one time its most sedulous servant, the money? And since this really is a family quarrel within the KMT, why all the publicity? Of course this involves question of character about a presidential contender. But it also shines a light on an issue that will remain long after the Soong scandal is forgotten, the KMT's colossal business empire.
In recent years, the KMT's massive assets, abundant manpower, and deeply centralized political resources have not been able to tackle Soong. Those who did not like Soong's style could do nothing but suffer heartburn with anxiety while they watched the steady rise in Soong's popularity ratings.
Now that they have finally found his weak spot, the KMT's mainstream faction and those who dislike Soong are grinning from ear to ear, while Soong loyalists are eating their hearts out.
But there are wider issues involved, the whole affair is no cause for celebration, whether you are mainstream or non-mainstream, whether you like Soong or not.
The money in question may have come from KMT-run businesses, government coffers, an elder, or political contributions. And on top of the problems of its origins, are the sums we now know or just the tip of an iceberg?
One thing we can be sure of, however, is that were it not for the KMT's business empire this scam -- if that is what it is -- would be harder to pull off. If there were no KMT-run Hua Hsia Investment Holding Co (華夏投資公司), then there would be no Hua Hsia Investment Welfare Fund. If there were no KMT-run Chung Hsing Bills Finance Corp. (中興票券), Soong's securities dealings could not have been so easy. Without the KMT-run Broadcasting Corporation of China (中國廣播公司), there would not be the BCC Century Fund. If the Bank SinoPac (華信銀行) were not run by the KMT, it could have been much easier to check up the accounts. If not for the countless profits turned in by the KMT-run businesses, why should Soong have a secret account of his own? Why should he have needed a "secretary general's special account?" Now, even the exact amount Soong actually obtained is getting more and more foggy -- is it NT$140 million plus or over NT$200 million?
If not for the vast size, abundant profits and convoluted account books of the KMT's business empire, how could it be so easy to mislay at least NT$140 million and maybe NT$240 million? How could it be that, after being reminded of the issue and after rummaging through their books, the KMT still cannot set the record straight? According to media reports, the KMT's treasurer Liu Tai-ying (劉泰英) "carried a thick stack of account books to the KMT's central headquarters. But he was reportedly unable to find the two transactions in question."
Party-run businesses are a political and economic cancer for Taiwan. Those who disagree can take almost any major scandal of the last few years and the odds are that it will involve party-run businesses. Actually in most democratic countries political parties don't own businesses for the simple reason that there is an obvious conflict of interests for any party when in power, between being both policymakers and having businesses keenly affected by those policies. They are both umpires and players with the obvious ability to bend the rules to suit themselves.
To avoid illegitimate financial transactions on the part of government officials and elected representatives at all levels, we have even set up a Public Officials' Assets Declaration Law (公職人員財產申報法), which requires county councilors, elementary and high school principals, and higher-level public officials to declare their assets (Article 2). The act also requires provincial governors, provincial councilors, provincial-level mayors, and higher-level officials to not only declare their assets but to put their assets into a trust (Article 7). We have even enacted a clause in Article 14-1 of the Government Employees' Services Act (公務員服務法) in order to prevent influence peddling after retirement.
Why does the state have to temporarily remove these people's rights to manage their own finances and limit their post-retirement employment rights? Because they have policy-making powers. If they use these powers to peddle influence or engage in insider trading, there would be no effective way to stop them. Such issues are very difficult for the judiciary to investigate. Therefore, we have to take a measure that nips them in the bud, by removing officials from the path of temptation.
In the KMT, decisions made by the leadership are implemented by the administration. Issues decided at the Wednesday meetings of its Central Standing Committee are then "handed over to comrades in the administration to implement" -- a phraseology that betrays the KMT's Leninist heritage. The power of the KMT's officials is actually far greater than that given to legislators to participate in policy-making. But in this situation how can a political party -- especially the ruling party -- continue to run businesses?
Despite the sluggish economy and high unemployment rates in recent years, the KMT has continued to reap abundant revenues. It is increasingly shameless about its riches while the public remains as poor as ever. Soong used to enjoy a reputation as a Santa Claus, a fount of party-funded largesse, and he himself said that he was "carrying a basket and delivering desserts." Unsurprisingly Soong won a crushing victory in his bid for provincial governor and things had also been going very well for him since the presidential race began to gather steam, until the scales were tipped by a trivial couple of hundred million dollars.
But what about the KMT's coffers, assets, and businesses? Whether in vote-buying or in influence peddling, the party's invincible wealth has served as its main source of mobilization power. It has also been the superglue that heals the party's internal grudges and maintains party unity. When will a reversal of fortune like Soong's ever come to the KMT?
Chang Ching-hsi is a professor of economics at National Taiwan University.
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