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Another twist in Taiwan's election
antics
By Laurence Eyton
TAIPEI - It must have seemed a good idea to
someone, somewhere. According to the Taiwanese
newsmagazine Win-Win Weekly, the good idea originated
with middle-ranking officials in Beijing's Taiwan
Affairs Office, or so a friend of the chief protagonist
claims. The plan was this: Get Taiwan's most notorious
fugitive to claim that he had made illegal political
donations to the election campaign of the Democratic
Progressive Party's (DPP) Chen Shui-bian in 2000, thus
involving Chen, now president, in a scandal that would
spoil his chances of re-election.
Last week the
plan was put into effect - with potentially serious
consequences for those it was meant to help. The
fugitive in question is Chen Yu-hao, the erstwhile boss
of the Tuntex group, a conglomerate with interests
ranging across department stores, property development,
construction and textiles.
Tuntex used to be one
of Taiwan's premier industrial groups. Now it is one of
its foremost deadbeats, awash in US$1.8 billion worth of
debt, and being slowly broken up and sold off by its
creditors - mainly state-owned banks. Now Chen Yu-hao
has gone from being Taiwan's 10th-richest person to
holding a prominent place on its 10 most wanted
fugitives list.
The conglomerate was badly hit,
first by the decade-long property-market slump in
Taiwan, which is only now beginning to turn around, then
by the loss of markets for its textile goods as a result
of the Asian financial crisis in 1997, and finally by a
disastrous fire at a science park on the outskirts of
Taipei in 2001.
But what really drove the
company on to the rocks was the raiding of Chen Yu-hao's
Taipei residence in December 2002 by investigators from
the Ministry of Justice on suspicion that the Tuntex
chief had filched NT$800 million (US$24 million) for a
group subsidiary in 1995 to invest on his own behalf in
China.
In June 2002, six months before the raid,
Chen Yu-hao and his wife fled Taiwan and headed to the
United States. For the past year they have lived in
China. In May 2003 the Taipei District Court issued a
warrant for his arrest and he has been listed as a
fugitive ever since.
On February 2, Chen Yu-hao
faxed three letters from China to opposition lawmakers
accusing President Chen Shui-bian of taking campaign
donations from him. He also said that Chen Shui-bian had
promised to attack corruption and had not done so, much
to Chen Yu-hao's disappointment, and claimed that the
case for which the warrant against him was issued was
trumped up by the DPP government to force him into
exile, as he was someone who knew too much that was
potentially embarrassing.
The letters were
immediately printed in the Central Daily News, the party
newspaper of the once-mighty Kuomintang (KMT), whose
chairman Lien Chan is now Chen Shui-bian's opponent in
the presidential election scheduled for March 20.
The result was an instant furor, which in itself
is somewhat strange since, apart from the claim that the
charges against the president were malicious, the
fugitive's letter contained little specific information
except that he had made donations to the DPP that the
party had never acknowledged. No amounts were specified
and no purpose was suggested as to why he made the
donations. He also claimed to have met yet another Chen,
the current Presidential Office deputy secretary general
Chen Che-nan, and to have given him money.
Nevertheless politicians from the KMT and its
"pan-blue alliance" election ally, the People First
Party (PFP) - the chairman of which, James Soong, is
Lien's running mate - hastened to condemn the DPP for
accepting donations from a fugitive from justice and
demanded explanations as to why Chen Yu-hao should
donate money to the DPP in any case. Why were these
donations hidden, they asked, and what did they buy?
The immediate reaction of a number of DPP and
government spokesmen was to deny that the donations had
ever taken place. This was a mistake, and it was one
that kept the story alive all week.
After all,
the party had in fact taken donations from the Tuntex
boss, and on Tuesday two senior members of Chen
Shui-bian's re-election campaign team showed copies of
the "thank you" notes that they had sent to Chen Yu-hao
in 2000 acknowledging receipt of two donations of NT$5
million ($150,000) each.
Even then, given the
flimsiness of Chen Yu-hao's allegations and the lack of
any evidence of DPP wrongdoing, it is interesting that
the "scandal" managed to stay aloft for the rest of the
week. By Sunday it had attracted the attention of the
international wire services, with the Associated Press
writing: "President Chen Shui-bian has pledged to fight
corruption and financial crimes as his ruling political
party struggles to clean itself of allegations that it
took illegal donations from a bankrupt former
real-estate tycoon."
By the time AP filed its
report, however, the situation had already turned in the
government's favor, and Chen Yu-hao's allegations may
instead prove to be a serious misstep for the
opposition.
Midweek the pan-blues thought Chen
Yu-hao's allegations really were a stick they could beat
Chen Shui-bian and the DPP with. Certainly Taiwan's
mostly pan-blue-supporting media gleefully suggested
that the DPP, with its strong anti-corruption image, had
been found with its hand in the cookie jar, an
impression bolstered by the DPP's denial of receiving
donations and its subsequent flip-flop.
There
were a number of problems that the pan-blues failed to
see, however. The first was the vagueness of Chen
Yu-hao's allegations. Specifically, he had accused
President Chen and the DPP of five things: taking his
money; not giving receipts for it - which implied that
the money had never actually made its way into party
funds but had been pocketed instead; having a poor
anti-corruption record; manufacturing a case against
him; and encouraging Taiwanese hate for China. It was
left to pan-blue lawmakers and their media allies to try
to tailor this thin cloth into a shroud for Chen
Shui-bian's presidential chances.
Their first
tactic was to suggest that Chen Yu-hao's donations were
illegal, in that it was against the law for the DPP to
take them. The problem with this was that Taiwan simply
has no law specifying what is or is not an illegal
donation. The DPP introduced one into the legislature in
December 2002, where it has languished ever since out of
indifference by the pan-blues - the alliance still
dominating the legislature and setting its agenda. To
this day, no donation in Taiwan, in and of itself, is
illegal. A donation may, of course, nevertheless be used
for an illegal purpose - influence buying, cash for
favors - and the next pan-blue tactic was to suggest
that this is what had happened in Chen Yu-hao's case.
What Chen Yu-hao specifically needed for the
ailing Tuntex group was, of course, money, or at least
credit. And low and behold, just after Chen Shui-bian
came to office, the Ministry of Finance provided Chen
Yu-hao with low-interest loans, money which, it was
implied, he then illegally transferred to China. Did not
the DPP have something to answer here?
The DPP's
riposte was a double-barreled blast that left the
credibility of the allegations against it in shreds and
provided a chance for the party to heap criticism on its
attackers that might make them rue the day they ever
heard Chen Yu-hao's name.
In answer to the
specific allegation that the Ministry of Finance had
been granted Tuntex low-interest loans in 2000, the
DPP's presidential campaign headquarters chief, Wu
Nai-jen, said that since 2000 was the start of the most
severe recession Taiwan has ever had, the Finance
Ministry evolved a financial-relief program that helped
many local companies to deal with their financial woes.
There were standard application procedures, any eligible
company could apply - and many aside from Tuntex did -
and part of the relief program included low-interest
loans.
Interestingly, the idea of a
financial-relief program was adopted from the previous
KMT government, to tide Taiwanese companies over after
the "external shock" of the Asian financial crisis in
1997. As companies in the non-information-technology
manufacturing and textile sectors, more than half of
whose exports went to Southeast Asia, saw their markets
collapse, the government, realizing that many would find
themselves in a liquidity crunch, told banks to roll
over loans that otherwise would have been deemed
non-performing and set up a discrete policy of bailing
troubled companies out.
At the time this was
criticized by the DPP as an example of exactly the kind
of crony capitalism that had laid Taiwan's neighbors low
- after all, wasn't it the case that most of the heads
of the big conglomerates were also senior figures in the
KMT?
Once the DPP was in office, however, it
decided that rolling over loans and providing more was
better than seeing its reputation for economic
management trashed by major corporate failures.
But it was the DPP's second line of attack that
might result in the attempt to smear the president
backfiring on the smearers. Wasn't it the case, the DPP
said, that Chen Yu-hao had also donated money to the KMT
campaign in 2000? And hadn't he also done so before? And
wasn't one of his donations at the root of allegations
that James Soong, during his time as the KMT's secretary
general, had illegally transferred some NT$360 million
($10.8 million) of party funds to the bank accounts of
members of his own family?
Unfortunately for the
pan-blue alliance, all this was, in fact, true. The KMT
admitted that in the run-up to the 2000 election it had
received NT$100 million from Chen Yu-hao. That it should
get 10 times more than the DPP spoke volumes about whom
Chen Yu-hao expected to win the election and how he
hedged his bets. But there was another NT$100 million
donation that haunts the pan-blue campaign. In mid-1991
Chen Yu-hao gave that sum to then KMT secretary general
James Soong - the same James Soong who is now the
pan-blue vice-presidential candidate. Instead of going
into the party's campaign coffers, however, this sum
went into an account held by Soong's son at the Chung
Hsing Bills Finance Co in Taipei.
The Chen
Yu-hao donation was part of a larger sum, which in
December 1999 the KMT accused Soong of embezzling. Soong
himself denied any wrongdoing, claiming that the money
had been given to him by the then president Lee Teng-hui
to look after the family of the late president Chiang
Ching-kuo and other unspecified political purposes. Lee
denied this, and the matter has never been resolved. But
the accusation probably cost Soong the presidential
election in March 2000.
In 2001 prosecutors
dropped the case, saying there was no evidence of
illegality in Soong's putting the KMT's money in the
names of his family members, only for the KMT's lawyers
to protest that there was ample evidence of wrongdoing
and accuse the prosecutors of making a political
decision. After all, they argued, when Soong vacated the
party secretariat he never turned over these funds to
his successor and when he left the KMT altogether in
1999, he never returned the money, surely prima facie
evidence of his intent to defraud.
The KMT then
told its lawyers to back off. Times had changed and
Soong was no longer a KMT renegade mounting an
independent presidential bid that could - and did -
destroy the KMT's chances of holding on to power.
Instead, he was the man who lost the presidential
election by a hair's breadth, and the leader of a
powerful new party, which the KMT had to appease and
ally itself with if it was ever to enjoy the fruits of
office again.
Taiwan's visceral political divide
is always thought to be based on where a person stands
on unification with China or independence. But it is not
unfair to say that a person's stance on Soong's guilt in
the Chung Hsing Bills Finance scandal runs to this a
close second. Voters see him either as a crook who
escaped punishment because of the KMT's expediency, or
the victim of a hugely formidable smear campaign. It is
not outrageously speculative to think that Chen Yu-hao's
allegations against Chen Shui-bian were intended to have
the same impact on the president as the Chung Hsing
Bills Finance scandal had on Soong - the allegation that
there had never been any receipts for the donation in
particular was to suggest that Chen Shui-bian or his
underlings had pocketed the money.
The pan-blues
found themselves, however, on the back foot. The
donations were not illegal and they were receipted. If
it was compromising to take money from the Tuntex boss,
then they themselves were at least 10 times more
compromised. Not only this, but they had also given a
reason for the DPP to rake up the Chung Hsing Bills
Finance scandal, allegations that still dog Soong. This
was one goal down. But the likelihood that Chen Yu-hao
was put up to mischief by Beijing officials, at least
according to Win-Win Weekly's sources that suggest China
is trying to interfere in Taiwan's election and the
pan-blues are abetting this, is possibly another.
But the DPP has used a boast by Chen Yu-hao late
last year that he was the top tax-paying Taiwanese
businessman in China - where he has invested NT$13
billion though his Xiamen Xianglu Group, according to
Taiwan's Ministry of Finance - to go beyond the donation
issue and to question the whole relationship of the KMT
both to China-based Taiwanese businessmen and to the
Beijing government.
The pan-blues have launched
a massive campaign in China to get Taiwanese businessmen
there to return to Taiwan to vote for the Lien-Soong
ticket. And on Saturday the pan-blues opened a campaign
headquarters in Shanghai. All of these activities are
illegal under Chinese law, but authorities have turned a
blind eye to them, the DPP says, questioning what the
pan-blue alliance has promised Beijing in return.
On top of this, attention has been drawn to the
very murky reputation of those who are heading up the
pan-blue efforts in China. Among those vigorously
campaigning for the Lien-Soong ticket is not only Chen
Yu-hao but a number of other fugitives such as fraudster
Chang Yang, Wu Tzer-yuan, a former official sentenced to
15 years for corruption - who, embarrassingly, is a
close friend of Lien Chan - and Gloria Chu, who is
wanted for the theft of NT$1.4 million from the
broadcasting company she used to manage.
Obviously, the DPP says, these fugitives support
a pan-blue victory because they know they will be
pardoned or their cases will be dropped if the pan-blues
come to power. Given the KMT's penchant for corrupt
cronyism and the ongoing controversy over assets the
party stole from the state during its 50 years in power,
these DPP suggestions strike a chord with voters, and
may seriously hurt the pan-blue campaign - Taiwanese
have shown themselves increasingly sensitive to and
resentful of corruption.
Allegations that a
pan-blue presidency means putting foxes in charge of the
henhouse resonate. The irony is that this might not have
been an issue in the election - the DPP having switched
off its negative campaigning since the Lunar New Year in
mid-January - if Chen Yu-hao hadn't tried to embroil
Chen Shui-bian in scandal in the first place.
(Copyright 2004 Asia Times Online Co, Ltd. All
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