State-owned Banks "Facilitate" the “Join the UN” Campaign, but the Financial Supervisory Commission Merely Looks on

State-owned Banks "Facilitate" the “Join the UN” Campaign, but the Financial Supervisory Commission Merely Looks on

United Daily News Editorial (Taipei, Taiwan, ROC)
(A translation)
October 25, 2007


A SUMMARY

A row of well-dressed men in expensive business suits, stand on the floor of the Legislative Yuan. These men are board chairmen and general managers of state-owned banks and credit unions. They have been summoned here by Members of the Legislature. These officials are guilty of turning funds entrusted to their care over to the Executive Yuan, allowing the ruling DPP to misuse these funds paying for its "Join the UN" campaign. They now stand obediently before the legislature. A number of years ago, when the Legislative Yuan interpellated Economics Minister Chung Tsai-yi, she was forced to admit she had no idea what was happening all around her, and hurriedly resigned after only a little over 40 days in office. The public regarded the incident as a joke. But at least she had the decency to admit her inadequacies, and conducted herself correspondingly. The apparent cluelessness of our current Finance Minister is far more shocking. He led a row of board chairmen and general managers standing besides him in the Legislative Yuan. Officials of our current Financial Supervisory Commission were “lectured” not long ago by a judge about their mistakes. Today they are perfectly aware of the illicit activities of these state-owned banks and credit unions. But they are unwilling or unable to do anything about it. Political appointees and professional managers alike have suffered humiliation from the legislators and abuse from the ruling DPP. Do they really intend to cling to their jobs without giving a thought to their dignity? No wonder some people are nostalgic for Chung Tsai-yi.

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A row of well-dressed men in expensive business suits, stand on the floor of the Legislative Yuan. These men are board chairmen and general managers of state-owned banks and credit unions. They have been summoned here by Members of the Legislature. These officials are guilty of turning funds entrusted to their care over to the Executive Yuan, allowing the ruling DPP to misuse these funds paying for its "Join the UN" campaign. They now stand obediently before the legislature.

State-owned banks and credit unions are well recognized "golden rice bowls." Which of these officials, each of whom has clawed his way to the rank of board chairmen or general manager, isn't a player? Yet here they stand, hemming and hawing, with nothing to say. They must endure this humiliation because they know they have behaved dishonorably. Grilling by legislators reveals that most of these officials, using "advertising expenditures" as a pretext, turned funds under their management over to the Government Information Office, for the purpose of promoting the ruling DPP regime's "Join the UN" campaign. The Taiwan Cooperative Bank and the Taiwan Business Bank, for example, invited major borrowers to participate in a series of Democratic Progressive Party fundraising dinners. Even the First Commercial Bank, which has already been privatized, donated NT$ 10 million to the National Cultural Association, in the name of "Propaganda Activities to Promote the Image of the Nation."

These highly partisan expenditures were clearly intended to help the Democratic Progressive Party's election efforts. They were illegitimate on the face of it, and could only be made under false pretenses. They violate the revenue and expenditure provisions of the Budget Act for state-owned banks and credit unions. They exceed the limits of authority for professional managers in terms of corporate governance. Most of these banks and credit unions are publicly held companies. Not only must they answer to their depositors, they must also answer to small shareholders. What responsible financier is willing to ignore profits and scatter money to the winds? And we haven't even mentioned the issue of legal liability. Legislators fulminated, demanding that these funds to be deducted directly from these broad chairmen’s and general managers' year-end bonuses. In fact, these bank managers are already under suspicion for diverting funds under the budget and being guilty of perfidy.

These managers of state-owned banks and credit unions, under pressure from "higher authorities," did not dare to speak freely. Finance Minister Ho Chih-chin looked as if he were under duress. He mumbled some vague generalities like “these funds were used to promote integrated administrative programs of the Executive Yuan" This is not the first time Minister Ho has been outside the loop. Public announcements of important government plans such as tax reform were made by Ho Mei-yue, Chairperson of the Council for Economic Planning and Development. When questioned by reporters, Minister Ho said he knew nothing about the matter. He Chih-chin's role is to provide a scholarly image for the Ministry of Finance. The fact that he has no real power has been public knowledge for a long time. The Financial Supervisory Commission is the domestic financial organization responsible for oversight and control of the nation's domestic financial institutions. It stands on the front lines. It is the entity that most ought to step forward and take responsibility for the scandal. But what are Chairman Hu Sheng-cheng and his deputy and concurrent Banking Bureau Director Chang Hsiu-lien doing at this very moment?

In recent years, the Financial Supervisory Commission has often been criticized for doing too much or too little. Many of its chairmen, commissioners, and directors are mired in legal scandals. The Rebar Group controversy led judges to suspect that Financial Supervisory Commission managers had been derelict in supervising illegal loans. The public still has a vivid memory of the presiding judge blasting the Financial Supervisory Commission for dereliction of duty and patronage. Faced with such accusations, the Financial Supervisory Commission has vigorously and resolutely sworn to establish strict controls. During the past half year it has helped prosecute quite a few domestic bank managers. Bank managers now jump at the slightest sound. For public financial institutions to turn over funds to designated political organizations or political parties, under the guise of business expenses, and to expect not to be investigated, fined, and prosecuted, is inconceivable.

And yet now, before the public eye, in broad daylight, we see banks collectively donating money to the "Join the UN" campaign, inviting major borrowers to wine and dine Democratic Progressive Party candidates. We see bank chairmen of the board and general managers being called onto the floor of the Legislative Yuan and being forced to stand at attention, receive tongue-lashings, while struggling to explain themselves. Can Hu Sheng-cheng and Chang Hsiu-lien really turn a blind eye and a deaf ear to these outrages? These public banks and credit unions, which take their orders from major stockholders of public shares, have harmed the interests of many smaller shareholders. Isn't the Securities Investors’Protection Center supposed to be watching over such abuses? Members of the judiciary reproached the Financial Supervisory Commission for official patronage, for allowing favored banks to violate the law. Yet now they see with their own eyes the twisted “relationships” between the Executive Yuan, the Financial Supervisory Commission, and state owned banks and credit unions. How are they supposed to feel?

A number of years ago, when the Legislative Yuan interpellated Economics Minister Affairs Chung Tsai-yi, she was forced to admit she had no idea what was happening all around her, and hurriedly resigned after a little over 40 days in office. The public regarded the incident as a joke. But at least she had the decency to admit her inadequacies, and conducted herself correspondingly. The apparent cluelessness of our current Finance Minister is far more shocking. Ho “led” a row of board chairmen and general managers standing besides him in the Legislative Yuan. Officials of our current Financial Supervisory Commission were “lectured” not long ago by a judge about their mistakes. They are now fully aware of these illicit activities of state-owned banks and credit unions. But they are unwilling or unable to do anything about it. Political appointees and professional managers alike have suffered humiliation from the legislators and abuse from the ruling DPP. Do they really intend to cling to their jobs without giving a thought to their dignity? No wonder some people are nostalgic for Chung Tsai-yi.



(Courtesy of United Daily News)

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