Former President Chen Shui-bian's Secret Offshore Accounts

So where did the vast amounts of wealth come from? Was any of it obtained illegally? And what warnings does this scandal hold for Taiwan's political environment and the future of its democracy?

In mid-August, the media and KMT legislator Hung Shiu-chu exposed a number of secret accounts set up by former president Chen Shui-bian in Singapore and Switzerland under the names of his brother-in-law Wu Ching-mao and his daughter-in-law Huang Jui-ching. More than US$30 million had been transferred from Taiwan into these accounts. Due to suspicions of money laundering, Swiss federal prosecutors wrote to the Taiwanese authorities in July 2008 requesting judicial assistance.

When the news broke, the whole country was in uproar. Chen Shui-bian immediately called a press conference in which he admitted that he had not accurately reported contributions received during four elections-two for Taipei City mayor and two for president-but stated that he didn't know until early this year that his wife Wu Shu-chen had wired leftover election funds into offshore accounts. He stated, "I could not continue to lie to myself and others. I've decided to come clean. I have done something not permitted by the law." He expressed his apologies to the people of Taiwan.

Chen Shui-bian pointed out that prior to the implementation of the Political Contribution Act on 31 March 2004, there were many deficiencies in the system for reporting election funds. How to go about honestly reporting election contributions had been a big headache for many individuals running for office. He also questioned the NT$670 million in contributions to, and NT$37 million left over from, the campaigns of Ma Ying-jeou and Vincent Siew during the presidential elections earlier this year, asking, "Does anybody really believe these figures?"

Chen Shui-bian, who, despite protesting his innocence, has been surrounded by suspicions about his state affairs fund over the past year, now faces another judicial predicament. The political and economic fallout from the affairs cannot be simply swept under the rug.

According to former DPP chairman Shih Ming-teh, when the Second-Stage Financial Reforms were being implemented, businesses gave the first family NT$2.7 billion in donations, so that it was not credible that the Chen family only transferred offshore the amount of money found in the Swiss accounts. Just how many of the numerous rumors about the former first family accepting bribes over the past four years are true? Authorities are investigating and will leave no stone unturned.

Pan-green supporters are crushed by notion that "the Son of Taiwan" would betray his ideals of clean government and "loving Taiwan" by wiring huge sums overseas. Chen Shui-bian and Wu Shu-chen took it upon themselves to announce their withdrawal from the party. Despite their distancing themselves from the DPP, new party chairperson Tsai Ying-wen, faced with a disgraceful conclusion to the Chen Shui-bian era, has found that the biggest political problems on her plate are how to encourage supporters to return and how to rebuild the DPP's ideals and anti-corruption image.

As the money laundering investigation unfolds, just how many officials in the former administration will be found to have helped cover up crimes or to have served as secret informants? How many enterprises will it impact? How much economic and political turbulence will it stir up? How many more scandals will be brought to light? These are among the challenges faced by the new administration.

In January 2008, for example, the now retired Ministry of Justice Investigation Bureau director Yeh Sheng-mao received intelligence on Wu Ching-mao's offshore accounts from the Egmont Group, an international anti-money-laundering organization; but when the information was handed over to prosecutors, he halted investigations for half a year. Did this six-month window give Chen Shui-bian time to destroy incriminating evidence? If so, it will make investigating this case all the more difficult.

Taiwan's Money Laundering Prevention and Control Act defines money laundering as covering up, hiding, receiving, or transporting "illicit gain." If investigators are unable to prove that the money wired abroad by Chen Shui-bian was obtained illegally, the most they can do is slap him with an administrative fine for inaccurate reporting of unspent campaign funds.

The former first family, the subject of an unending stream of corruption rumors during Chen's eight years in office, has become the target of moral and political accusations from all quarters; but a review of the system is also imperative. The 2003 UN Convention against Corruption stipulates that if the spending and living standards of public servants are not consistent with their salaries, then explanations should be required. Furthermore, if a sudden increase in an official's assets is clearly the result of illegal activity, but there is a lack of evidence because those that gave bribes are unwilling to speak up, legal proceedings can still be initiated.

Another example is Taiwan's Political Contribution Act. It caps political contributions by businesses at NT$3 million a year, but does not compel businesses to divulge the details of their contributions, so it's impossible for the National Tax Administration to know whether that amount is exceeded. Adding to the problem, political wrangling has thus far prevented the passage of provisions on "assets from ambiguous sources" which are a critical part of the Public Functionary Assets Disclosure Act. Today, with the public fed up with corrupt and power-hungry politicians, negotiations should be immediately launched among all parties to prevent future corrupt politicians from taking advantage of the system.