Sunday, October 28, 2007

State-owned Banks "Facilitate" the Join the UN Campaign

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 row of well-dressed men in expensive business suits, stands on the floor of the Legislative Yuan. These men are CEOs 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 CEO 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 10 million NT to the National Cultural Association, in the name of "Pubic Relations 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 Law for state-owned banks and credit unions. They exceed the limits of authority for professional managers of such institutions. Most of these banks and credit unions are publicly held companies. Not only must they must 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 CEOs' and general managers' year end bonuses. In fact, these bank managers are already under suspicion for diverting funds and violating the public trust.

These managers of state-owned bank and credit union managers, under pressure from "higher authorities," did not dare speaking freely. Minister of Finance He Chih-chin looked as if he were under duress. He mumbled some vague generalities about "Administrative Guidance by a Comprehensive Executive Yuan Plan." This is not the first time Minister He has been outside the loop. Public announcements of important government plans such as tax reform were made by Conference for Economic Reconstruction Chairman He Mei-yue. When questioned, Minister He 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 current Bank Bureau Vice Chairman Chang Hsiu-lien doing at this very moment?

In recent years, the Financial Supervisory Commission has often been criticized for doing too much. Many of its committee chairmen, committee members, and bureau chiefs are mired in legal scandals. The Rebar Group controversy led judges to suspect that Financial Supervisory Commission managers had been making 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 and younger shareholders. Isn't the Securities and Futures Investors Protection Center supposed to be watching over such abuses? Officials of the judiciary reproached the Financial Supervisory Commission for official patronage, for allowing favored banks to violate the law. Yet now we see with our own eyes "guanxi" between the Executive Yuan, the Financial Supervisory Commission, and state owned banks and credit unions. How are we supposed to feel?

A number of years ago, when the Legislative Yuan interpellated Minister of Economic Affairs Chung Tsai-yi, she was forced to admit she had no idea what was happening all around her, and to hurriedly resigned after only 40 days in office. The public regarded the incident as a joke. But at least the government had the decency to admit its inadequacies, and conduct itself correspondingly. The apparent cluelessness of our current Minister of Finance is far more shocking. Standing alongside a row of CEOs and general managers in the Legislative Yuan, officials of our current Financial Supervisory Commission apparently need to have their mistakes pointed out to them in court by a judge. In fact they are perfectly aware of the 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 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.

2007.10.25 03:39 am








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