Party Financing Corruptions in Taiwan

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Party Financing Corruptions in Taiwan An
Action Plan for TI-Taiwan

• Tong-Yi Huang
• Board Member, TI-Taiwan
• Assistant Professor

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Outline

• I. Introduction
• II. Short History of Taiwans Politics
• III. KMT Taiwans Party-State Capitalism
• IV. Party-state Capitalism and Corruption
• V. Driving Forces for Promoting Party Finance
  Transparency
• VI. How KMT Managed its Assets
• VII. Other Government Actions
• VIII. Our Action Plan

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I. Introduction

• A survey by TI Taiwan in 2001 on political
  corruption in Taiwan (Black-Gold Politics)
  concluded that political party is one of the
  major sources of political corruption
• To formulate an action plan to raise the public
  awareness and press the regulation on party
  finance

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II. Major developments in Taiwans Political
History

• Since 1895, Taiwan was a Japanese colony
• and was returned to Republic of China in 1945
• 1949, the National Government fled to Taiwan and
  an authoritarian regime was started
• 1988 witnessed the establishment of an
  opposition party Democratic Progressive Party
  (the DPP) and a democratization process started
  since then
• 2000, the KMT was replaced by the DPP in the
  Presidential Election, the first ever party
  turnover was established in Taiwan

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III. KMT Taiwans Party-State Capitalism

• 1.Background
• Inherited state-owned enterprise in 1945
• As a ruling party from foreign, the KMT developed
  a patron-client relationship with local factions
  to obtain political legitimacy
• The KMT acted on behalf of the state and
  interfered with market operations and resources
  allocation
• State coffer is equivalent to party coffer

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III. KMT Taiwans Party-State Capitalism

• 2. Phenomenon
• The KMT was involved in 1/3 of the profitable
  companies invested by state-owned enterprises
• Companies were run in black box and the public
  was excluded from investing in them
• The operations of these companies were beyond the
  oversight by the legislation
• In 1991, 12 KMT-run companies totaled 6.5 billion
  NT (191,000,000)and total assets were over 500
  billion NT(5.6 billion).

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III. KMT Taiwans Party-State Capitalism

• 3. Problems
• Conflict of interests
• Inside trading take action before policy is made
• Unfair competition
• Vote-buying was rampant during election
• Corruption was common in government and business

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IV. Driving Forces for Promoting Party Financing
Transparency

• The role of NGO and public awareness The report
  on KMT party assets by Taiwan Economic Research
  Association in 1991
• A free press
• Party competition and internal reform in 2000
  election
• KMT candidates pledge on party finance
  transparency

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V. How Does KMT Manage Party Assets

• Mar. 2001, KMT entrusted 2 billions of cash and
  bonds
• Sept. 2002, KMT returned (donated?) part of real
  estate to the government
• Sept. 2003, 22 billions worth of its assets to be
  entrusted to Swiss Bank

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VI. Other Government Acts

• Election expenditure subsidy to parties since
  1991
• Regulations on political campaigns and donations
• Disclosure of personal financial information for
  governmental officials since 1993
• Regulation on conflict of interests since 2000
• Acts of Party Law, Political Donation Law, Lobby
  Law are waiting to be approved

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Action Plan

• Monitoring KMTs management of assets and other
  partys involvement into business and media
• Evaluating the effectiveness of laws in force
• Reviewing drafts bills in light with
  international standard on party financing
• A Parliament Watch and lobby