A recent series of events -- the government's investment in Taiwan Goal, the selling at a loss of Sino Swearingen Aircraft Corp and the privatization of the Grand Hotel -- has demonstrated that the only thing the government's single-minded pursuit of privatization has taught us is that power can be exchanged for money and that privatization makes it possible to evade surveillance.
The legislature and the Control Yuan are guardians of the public purse and they should cooperate in the exercise of constitutional duties.
Premier Chang Chun-hsiung (
However, should not the Ministry of National Defense's investment in a private company be first approved by the legislature? When it comes to a government-invested private firm, should not the legislature have the authority to monitor the government and therefore the company?
In 1991, academics from the Taipei Society published a report titled Deconstructing KMT-State Capitalism. The report underpinned the Democratic Progressive Party's (DPP) criticism of the Chinese Nationalist Party's (KMT) economic intervention during its rule. The subtitle of the report was "The privatization of Taiwan's government-owned enterprises" and it discussed the way privatization under KMT rule was used to transfer investments and conceal them behind the guise of a private business. This kind of situation has yet to end despite eight years of DPP rule.
Even worse, Taiwan Goal shows that the DPP is no better than the KMT and has tried to use public tax dollars to invest in a private company and prepare an exit strategy for pan-green VIPs.
The Taiwan Goal incident shows that in the eight years of DPP power the government's tendency to treat the public coffers as a private account has worsened. In addition, the government has established a new model of escaping surveillance through privatization.
In the Taipei Society report, there is clear opposition to the rule that only firms that have more than 50 percent of their capital coming from public investment can be labeled government enterprises because, even with less than half that amount, the government could still be the majority shareholder.
However, once the company is considered private, it can avoid government monitoring. Take Taiwan Goal for example: Even if the 15 percent shareholding held by the Ministry of Economic Affairs through Yao Hua Glass Co is disregarded, the Ministry of National Defense still controls 45 percent of shares. That would make the defense ministry the majority shareholder, so it should have authority over the company. However, the narrow definition of what constitutes a government enterprise protects Taiwan Goal from public scrutiny through the legislature or the Control Yuan.
The report also emphasizes that in large modern enterprises or publicly traded firms, shares are often widely dispersed. Sometimes controlling as little as 3 percent or 4 percent of shares is enough to be a majority shareholder.
The government has tried to use public funds to investments in so-called "private enterprises" in order to "privatize" and establish a network of political influence in business. Looking at the eight years of DPP government, we see that despite democratization, "KMT-state capitalism" has only changed colors.
Kuei Hung-chen is an assistant professor at Shih Hsin University and a research fellow at the National Policy Foundation's interior affairs division.
Translated by Angela Hung
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