Thu, Jan 13, 2000 page9

• Dissecting the `Black Gold' phenomenon

  The KMT is built upon an intricate web of financial relationships; and they are unlikely to be untangled by Lien's reforming zeal

  • By Liu Shih-chung
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  In an unprecedented move to counteract criticism from the opposition Democratic Progressive Party (民主進步黨) for his party's connivance in "black gold" politics, Vice President Lien Chan(連戰), the KMT's presidential candidate, displayed a "looks-real-this-time" determination to fight election-related corruption and the political involvement of organized crime on Jan. 2.

  Lien emphasized that putting the KMT's party assets in trust was a "first step" in implementing a "third wave of reform." A follow-up poll conducted by the China Times four days later, however, demonstrated that 51 percent of the respondents treated Lien's declaration as nothing but an "electoral ploy." Of those polled, 55 percent even considered Lien's new policy "unrealistic."

  How Bad is "Black Gold"?

  

  Illustration: Mountain People

  Lien's announcement coincided with a survey released by the Common Wealth Magazine (天下雜誌) two weeks ago. The major results of the survey showed that one in four people in Taiwan feel ashamed of the country's rampant official corruption and gang-linked politics. The poll also showed a desire that the government urgently crack down on organized crime and improve public order. Over 60 percent of the respondents cited "black gold" politics as the No.1 reason behind the widening wealth gap in local society.

  In terms of "who will be capable of eliminating `black gold' in Taiwan," the magazine's survey showed that among the three leading presidential candidates, Lien trails far behind DPP's Chen Shiu-bian (陳水扁) and independent candidate James Soong (宋楚瑜).

  Of respondents, 36.5 percent supported Chen, with Soong and Lien winning only 12.59 percent and 4.05 percent support respectively. If Lien was not simply motivated by electoral considerations, why has he only taken up the issue of reforming the KMT's unsavory financial reputation now, instead of four years ago when he was running for Vice President?

  The need to boost Lien's electoral momentum only partially explains the KMT's about-face on "black gold" politics. Further questions still need to be asked about the sources, structure and strategies to deal with such forces that have eroded Taiwan's political and economic base over the last 50 years.

  How has the "black gold" phenomenon become a tumor in Taiwan's political and economic system, as some scholars have long claimed? To what extent has "black gold" jeopardized Taiwan's domestic politics and economy? What constitutes the bedrock for the growth of "black gold" elements? What methods might be effective in eradicating "black gold" in Taiwan?

  Origins of "Black Gold"

  "Black gold" politics refers to the connection between organized crime and government. To understand the origins of "black gold," however, we have to track back to the origins of the KMT.

  The KMT was a government-in-exile in 1949 when it moved to Taiwan. It was perceived by many Taiwanese as an "outside regime." Without legitimate support from the bottom, the party had to resort to local elections to mobilize grassroots support. By recruiting Taiwanese from its rank and file, the KMT successfully consolidated its local support through ideological education and the corporatist structure of the party. Through vote-buying and pork-barrel legislation, the KMT has also incorporated local factions into its political machine. Those local factions and its connections, based primarily on marriage, locality, language, clan and fellowships served as the basic network for the KMT's local power. To a great extent, the KMT and "black gold" can be treated as "twin brother."

  How Does "Black Gold" Operate?

  Where does the money for vote-buying coming from? Local factions themselves don't have the financial resources for vote buying, so the KMT transfers some of the economic privileges gained through its monopoly of power at the central government level to local factions in return for their political support. They generally use the following strategies:

  First, to limit economic competition, certain grassroots economic organizations are granted limited monopolies. These organizations include local banks, credit cooperatives (信用合作社), non-credit cooperatives such as fruit and vegetables cooperatives (青果合作社) and agricultural and fishery associations (農漁會). Local faction leaders are positioned as leading members of those organizations.

  Second, the KMT grants special loans through provincial banks in favor of people from local factions who are elected as members of the provincial assembly and local and city councils. The outcome of this policy is usually overlending by the banks concerned, creating the potential for a financial crises.

  Third, the KMT lets local factions profit from land and stock market speculation through their right to make adjustments to zoning regulations and their control of public construction operations. Inviting organized crime participation in public construction projects is a further source of income for local political factions.

  Fourth, the KMT has ignored the existence of underground industries such as the sex and gaming sectors, allowing local authorities to profit from bribes that these illegal businesses pay to stay in operation.

  Fifth, to resort to electoral intimidation or vote-buying to ensure solid support from local areas. Gangsters play a pivotal role in ensuring that votes go to the ruling party during elections.

  Sixth, the introduction of people with organized crime backgrounds or criminal records into the political arena. In the course of the KMT's rule, many people with such backgrounds have "laundered" themselves through elections. This has not only brought Taiwan's legislative branches at both the local and central levels into disrepute, but also endangers social stability and economic development.

  Through multiple channels of exchange, local factions acquire considerable economic and financial resources from the ruling party. In return, the KMT earns its political support from localities.

  The Influence of Organized Crime

  According to statistics released by the Ministry of the Interior's National Police Administration (內政部警政署), one in twelve members from current city and county councils, the Legislative Yuan and the National Assembly has criminal records.

  How did organized crime transform itself from a subordinate role of helping the KMT garner votes to the dominant position of actively influencing the political decision-making process?

  In the beginning, people with organized crime backgrounds tended to play the role of "fat cat" in local politics. They also serve as agents for the collection of ballots for KMT candidates. However, as Taiwan's democratization proceeds, the candidate-centered and policy-oriented campaign gradually has replaced traditional campaigning, especially in urban areas. As a result, organized crime was forced to change its role from electoral mobilizers to actual political participants.

  When organized crime figures became village and township representatives, city and county councilors, city and county council speakers, or even national congressmen, it created formal channels for those with criminal records to "launder" themselves through the political system. But the greater their involvement in politics, the more pervasive their influence, to the detriment of the whole political and economic structure.

  In this regard, although the KMT under President Lee Teng-hui (李登輝) has earned credit for continuing Taiwan's democratic reforms, Lee himself should take much of the responsibility for today's rampant "black gold" politics. Bearing the title of "Mr. Democracy," Lee has done nothing but consolidate the party's relationship with local factions to fight non-mainstream factions within the party on the one hand, and the opposition DPP on the other. The result has been the intensification of the "black gold" phenomenon in Taiwan.

  The result of the KMT's rule and the "black gold" politics it has nourished has brought three side-effects to Taiwan's political and economic system. These are: a corrupting political environment, people's lost of confidence in judicial independence, and the destruction of a fair and competitive space for economic activity.

  How To Eradicate "Black Gold" ?

  Among the three leading presidential candidates, Chen Shiu-bian was the first to raise the issue of rooting out "black gold" politics. In his "anti-black gold" platform, he proposed the assignment of a special prosecutor by the president to investigate vote-buying during all elections. He also emphasized the importance of establishing a special task force to search and collect evidence against criminal organizations and politicians with criminal ties. Moreover, he suggest amending current laws to prevent convicted criminals from running for elections for ten years after the end of their sentences.

  Chen also urged the setting up of an independent financial examination committee to supervise financial institutions to prevent corruption between government officials and conglomerates.

  And finally there has been the much debated proposal that a new law banning business investments by political parties be drawn up.

  As the candidate for the major opposition party, Chen has the advantage in attacking the KMT's use of "black gold." No one should doubt his determination to investigate the KMT's party assets and eliminate "black gold" politics once he is elected.

  While Chen gets high marks for his party's move to challenge the KMT's party enterprises, Lien Chan's surprise announcement that he too supports reform of the KMT's party enterprises and other matters deserves greater attention.

  Besides advocating the placement of the party's assets into a trust, Lien has also called for the separation of politics and business and the enactment of a political contribution law to regulate lobby groups in the Legislative Yuan and donations to political parties. The surveys I mentioned earlier showed that the majority of the public distrusted Lien's attempts to initiate such reform.

  It is a shame that Lien has so far failed to provide further details on how his reforms might be implemented. It is, therefore, natural that the public treat Lien's reforming zeal as little more than an election ploy.

  As for James Soong, an old guard who is a master of the art of"black gold," what can we expect from him? When Soong led the Taiwan Provincial Government, he often boasted that he traveled extensively around the Taiwan. The real story is that the most of the money he promised to grant to KMT-led local factions turned out to be personal favors to "local bosses." Have you heard Soong say how he would end "black gold," especially after he suffered from the financial scandal?

  Spiritual renewal

  Lee Yuan-tseh (李遠哲), the president of the Academia Sinica, once said that "organized crime is terrible, but corrupt officials are a lot worse" (黑道很可怕白道比黑道更可怕). The prescription to cure "black gold," therefore, involves not only institutional reform but also spiritual reform. To eradicate "black gold" politics, tremendous effort must be made to transform the relationship between the state, the market and civil society. Only when we establish an independent bureaucratic structure and judiciary, a free market and a fair political environment, an autonomous sense of community and a healthy civil society can a real democracy be brought into Taiwan.

  Liu Shih-chung (劉世忠) is deputy director of the DPP's Department of International Affairs.
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