The Ill-gotten Party Assets Settlement Committee yesterday held another hearing on the Chinese Nationalist Party’s (KMT) controversial sale of a property in Taipei’s Muzha (木柵) area, which used to house the party’s National Development and Research Institute until it was sold to a developer in 2005, presumably below its real market value.
The focus of yesterday’s hearing shifted to whether the KMT had sold the property at an unreasonably low price to avoid government oversight, after its June 6 hearing centered on whether the party had inappropriately acquired the property.
The 17,925 ping (5.92 hectares) property — which includes a parcel of land that the family of the original owner, Yeh Chung-chuan (葉中川), said was forcibly acquired by the KMT in 1964 — was sold in 2005 to the Yuanlih Group for NT$4.25 billion (US$140.93 million at the current exchange rate) to be converted into a residential complex.
Photo: CNA
The committee questioned the sale, as a real-estate appraisal conducted by the KMT put the property’s value at NT$5.87 billion, or NT$400,000 per ping, but it was eventually sold for a much lower price.
Lawyer Hsueh Chin-feng (薛欽峰), on behalf of Yuanlih, said the committee was making a wrong presumption that the property should be priced in accordance with its appraised value.
The appraisal did not necessarily reflect the property’s real price, with properties in the area going for NT$270,000 to NT$330,000 per ping at the time, lower than the appraisal price, Hsueh said.
Payment of the land value increment tax, which Yuanlih estimated to be NT$940 million at the time of the transaction, would have been split between the company and the KMT, so the total actual acquisition cost should include the tax, Hsueh said.
Factoring in other external costs, including converting some of the properties to parks, roads and preservation areas, the actual acquisition cost was NT$460,000 per ping, Hsueh said.
KMT Administration Committee director Chiu Da-chan (邱大展) said that the increment tax was a major factor in the transaction.
The tax was estimated to be NT$1.7 billion according to the appraisal report, which was conducted before the negotiation between the KMT and Yuanlih began, he said.
Minus the tax, the estimated book value of the property was NT$4.1 billion, which was close to the price at which the property was sold, Chiu said.
“The [assets] committee’s investigation report does not mention the increment tax at all, which is the ABC of accounting. Is not it [the omission] intentional defamation? Is it not mudslinging?” Chiu said.
Real-estate appraiser Chen Chen (陳諶) said it was reasonable that the appraisal put the property’s value at NT$5.87 billion and that the KMT’s negotiations with Yuanlih about the increment tax payment was a common practice in real-estate deals.
The committee would decide if the sale was inappropriate, and if so, the KMT and the developer might be asked to return ill-gotten profits to the state.
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