New Administration Cracks Down on Corruption

The crackdown has gotten off to a roaring start, and the government clearly means business. It has been a very busy month for law enforcement authorities: (1) In early August, Pingtung County Commissioner Cheng Tai-chi was put to death for the murder of a businessman. (2) Investigators called in high-ranking officials for questioning in connection with the 1993 murder of military procurement official Yin Ching-feng. (3) Chenlan Taoist Temple, an organization run by a man suspected of close ties with organized crime, has been raided. (4) Yiu Huai-yin, a member of the national legislature and chairman of two securities firms, has been charged with manipulating the stock price of a publicly traded firm. (5) Law enforcement agencies have raided the office and home of national legislator Liao Hwu-peng, who is suspected of trading phony shares in Chi Mei Optoelectronics Corporation. (6) The offices of Yuansen Internet Technology have been raided in connection with a suspected bogus land deal in Yangmei, Taoyuan County. (7) Five companies have been raided for suspected involvement in a plot to rig the bidding for shares in Chunghwa Telecom, which is scheduled for privatization soon.

Just count up the big-name government officials and business executives, and you will see that there is no hyperbole in the description of this campaign as the biggest crime sweep in ROC history.

President Chen Shui-bian spoke on the subject from abroad, stating that during his first two months in office he had put top priority on handling cross-strait relations and the relationship between the executive and legislative branches. This month, said Chen, the government would be concentrating on the fight against corruption. The president stressed his determination to get to the bottom of the cases of Yin Ching-feng and Cheng Tai-chi, and explained that "by solving crimes of the past, we can deter further crime in the future."

On August 9 the Ministry of Justice held a "Joint Action Conference for the Crackdown on Black-Gold" for over 200 law enforcement personnel working on the front lines in the fight against "black gold" corruption (the murky world where big business, organized crime, and politics come together). Taiwan High Court Prosecutor-General Lin Jie-der, who has been chosen to head up the new Black Gold Investigation Center, stressed that the Center will work as long as it takes and go wherever the evidence leads in investigating "black gold" criminal activities. Attendees at the Joint Action Conference reached a consensus on seven procedural issues related to the anti-corruption campaign. To name two, they agreed that: (1) the National Police Administration and the MOJ Investigation Bureau should carry out the campaign in cooperation with the Black Gold Investigation Center; and (2) when government agencies discover suspicious activities, they should report immediately to the BGIC.

On August 14, Premier Tang Fei chaired the second session of an ad-hoc committee on strengthening law and order, at which he instructed the Ministry of Justice to set up a special committee to prevent vote buying and gangster involvement in officer elections to be held early next year for farmers' and fishermen's associations across Taiwan.

The High Court Prosecutor's Office turned up the heat full-blast on August 16. A unit from the Tainan branch of the Black Gold Investigation Center was dispatched to Taipei to raid the office and home of Liao Hwu-peng, while the Bureau of Investigation, acting under the direction of the BGIC's Taichung branch, raided seven sites around Taiwan in an investigation of irregularities connected with the sell-off of government-held shares in Chunghwa Telecom as well as possible shady dealings related to the establishment of four fixed-line telecommunications firms which will soon be established to break up Chunghwa Telecom's monopoly in that sector. Elsewhere, investigators working on Taiwan Development's land deal in Yangmei received an anonymous tip charging that the land in question had been assessed at an inflated value. Authorities raided five affiliated real estate assessment firms and came away with evidence of wrongdoing on their part. The evidence also appears to indicate that two real estate assessment firms may have engaged in illegal behavior.

Apart from these raids, prosecutors were also busy on August 16 bringing an indictment for stock manipulation against Yiu Huai-yin, a KMT legislator with a past reputation as a rainmaker on the Taiwan Stock Exchange. Yiu is the first incumbent national legislator ever to receive an indictment. The Taipei District Prosecutors' Office has charged Yiu with violation of the Securities Exchange Law and breach of fiduciary duty, and has requested a prison sentence of three years and eight months.

Then on August 17 the Taipei District Prosecutors' Office raided Far Eastern Silo & Shipping and six other locations in order to investigate that company's sale of land to Taiwan Development & Trust Company. Investigators from the North Mobile Unit of the Investigation Bureau of the Ministry of Justice questioned a number of persons connected with the case. These include: Kao Chien-li, vice chairman of Taiwan Development; Chou Chi-peng, special assistant to legislator Gary Wang, and also to the president of Far Eastern Silo & Shipping; and Chen Yung-hsiang, a real estate appraiser. Also on the 17th, Taichung County Council speaker Yen Ching-piao and legislator Chen Ming-wen appeared in court in Tainan to face charges that they disrupted the general shareholders' meeting of a company in 1996.

More than any other organization, it is the Legislative Yuan that has been left with a black eye by the crackdown. Consider the following: (1) Some legislators have called for legalization of trading in stocks of unlisted companies, which just happens to be a very popular practice among legislators. (2) Several legislators and their assistants are under investigation for alleged trading of subscription rights of as-yet-unissued shares in fixed-line telecom companies for a handsome profit. (3) It appears that the land deal at Taiwan Development involved a legislator and former legislative assistants. (4) Special prosecutors from the Tainan District Prosecutors' Office raided the home and office of Liao Hwu-peng at the Ta-an Compound on August 16, eliciting protests from legislators of all party affiliations. The Legislative Yuan then held cross-party talks and reached a consensus that any search of properties under the legislature's control must be approved beforehand by the speaker of the Legislative Yuan. The legislators further agreed that this restriction should apply to the Ta-an Complex, a government-owned residence for legislators. The New Party and a few individual legislators have refused to endorse the agreement, which has been roundly criticized by a public that feels the legislators are only concerned about preserving their special privileges. Critics have blasted the legislators for attempting to create a legal no-man's land where they can flout the law with impunity.

In the face of this public indignation, individual legislators (including some from the People First Party and the Kuomintang) have distanced themselves from cross-party agreement. Shen Fu-hsiung, of the ruling Democratic Progressive Party, has suggested that the legislature ought to go at least one term without hiding behind its legislative immunity.

Bolstered by strong support from the administration and the public, prosecutors are continuing full-speed ahead with the campaign, and share prices have proven sensitive to the new political climate. Affiliates of conglomerates with close ties to the Kuomintang (Hualon, Yu Foung, etc.) have seen share prices close limit-down for several consecutive sessions.

At the same time, prosecutors have also taken a lot of criticism from those who argue that they have been overstepping the bounds of their authority and cutting corners on due process. According to a Commercial Times editorial, law enforcement agencies appeared to go into the raids on the legislature before they had even assembled all their evidence, which can only lessen respect for the law and set back the effort to stamp out black gold. "If they intend to go straight into the tiger's den, they must be aware that the tiger is powerful and has many ways of defending itself. The government is going to have to be much better prepared if it is to achieve success."

Others have stated that the new administration must have solid evidence to support its actions, and it cannot just go after a single political party. PFP legislator Shen Chich-hwei pointed out that unless law enforcement agencies show the same attitude toward both the KMT and the DPP, the campaign against black gold will turn out to be nothing more than a post-election purge. In addition, the new government should not zero in on a particular legislator with a reputation for corrupt ways and start legal proceedings without sufficient evidence in hand, because every person has basic human rights. In the investigation of Chenlan Taoist Temple, for example, the authorities dispatched a huge team of investigators to pore over the temple's books, then all of a sudden they went quiet, making no move either to restore tarnished reputations or explain the status of the investigation.

The campaign against black gold corruption is what everyone has been waiting for. It is also what President Chen promised to the nation. But will it actually accomplish much? According to a China Times editorial, the new government's ability to successfully tackle the problem depends on one very fundamental question: Does the administration view the black gold problem as simply a matter of law and order? Or does the administration see it as a structural problem? To view black gold as nothing more than the aberrant behavior of particular individuals would be an oversimplification. The fact is, black gold is an integral part of the social and economic fabric of Taiwan. In local politics and in the national legislature, it is a force to be reckoned with. It exerts a certain degree of control over personnel and policy decisions at the highest levels of government. The government must introduce a carefully conceived mechanism that is capable of taking over the role currently played in Taiwanese society by black gold. "The key to eliminating black gold," writes China Times, "is to establish a more rational and efficient system to replace the black gold system."

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On August 16, prosecutors raided the office of legislator Liao Hwu-peng (standing, center), who is suspected of trading in phony stock certificates. Legislators objected to the search and termed it illegal on the grounds of legislative immunity. (photo by Wang Fei-hua, Central News Agency)