Thursday, December 11, 2008

Political Considerations: Who Forced China Steel to Invest in a Hot Springs Resort?

Political Considerations: Who Forced China Steel to Invest in a Hot Springs Resort?
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
December 12, 2008

The public is going through hard times. A few days ago China Steel suspended several projects that were copiously bleeding red ink. These include the Kaohsiung Rapid Transit System, the Kaohsiung County Bora Spa Region Hotel BOT project, and the Taiwan High Speed Rail Project, which has already lost up to 5.7 billion NT.

China Steel's business partners immediately expressed dissatisfaction. Officials of Taiwan High Speed Rail said it "understood" the shareholders' financial concerns, but then accused China Steel of an "incomprehensible breach of common sense." Kaohsiung County Magistrate Yang Chiu-hsing's reaction was even more vehement. He openly accused China Steel's new chairman Chang Chia-chu of being "politically motivatied."

By suspending its investment, China Steel has effectively resigned itself to its losses. It is merely seeking a stop-loss point. Even housewives who play the stock market know about stop-loss points. Companies are now seeking capital and cutting costs. Even the structurally sound China Steel Corporation has been dragged down by the global recession. Not only has it slashed production, it has even abolished its practice of awarding bonuses to employees who do not take time off. Employees take turns using their vacation time, in a concerted effort to hold the line on "no layoffs, no pay cuts." The fact that China Steel is considering stopping these high-loss, poor outlook investments not part of its core competence, is merely common sense, an attempt to survive.

In fact, accusing China Steel of being politically motivated is itself politically motivated. Yang Chiu-hsing alleged that China Steel's decision to cut short its investments in the Bora Hotel was politically motivated. But the public is fully aware that the bid-winning Huang Chang Construction Company is chummy with the Chen Shui-bian family. Besides, the decision to invest in the project was made by former China Steel Chairman Lin Wen-yuan, a Chen family crony. Just exactly what constitutes political motivation? Was it politically motivated for a major steel company to invest in a hot springs resort hotel? Or was it politically motivated for the company's new management to put an end to its losses?

For the answer to this question, we hardly need the Commission of National Corporations. Just ask any small shareholder of China Steel. How many of them imagined their shares would wind up subsidizing a hot springs resort hotel? Is the meaning of political considerations not clear enough? Chang Chia-chu's decision was an attempt to bring the company back to its core competency. If anything, it is the diametric opposite of political considerations.

China Steel made a series of public offerings, and passed them off as privatization. But everything from personnel decisions to investment decisions prove they constituted "phony privatization, actual nationalization." Dubious investments were passed off as "cooperation with the government's policies." Investment in a hot springs resort hotel is one example. The huge investment in the Taiwan High Speed Rail System is another. China Steel has lost 5.7 billion NT in these projects. Without a solid foundation, what company could survive such losses? Taiwan High Speed Rail alleged that its "single loss was an anomaly." In fact, it was another example of what Yang Chiu-hsing referred to as political motivation. China Steel has been quietly absorbing the losses for years. That is the norm. A gussied up bottom line is the anomaly. China Steel endured its Taiwan High Speed Rail losses in silence. Why? Could it be that for the past few years, it has been burdened by political considerations?

The public has become highly dependent upon the Taiwan High Speed Rail. It is one of Taiwan most important construction projects in recent years. But its financial black hole is bottomless. In the past many public and private enterprises have become investors without concern for profits or losses. Just exactly what sort of considerations motivated them, they may be reluctant to state publicly. China Steel can no longer bear this heavy burden. It has finally shouted "No more!" Don't other investors, also suffering in silence, feel exactly the same way? Take the well-known China Aviation Development Foundation's controversial investment in the Taiwan High Speed Rail System. Twenty years ago major shareholders of China Airlines set up the China Aviation Development Foundation. Its purpose was "to help the Republic of China develop an aviation industry." Yet it has been forced to sink 4.5 billion NT into Taiwan High Speed Rail, a clear rival of the aviation industry. The entire procedure was brutal, unreasonable, and flagrantly illegal. Former China Aviation Development Foundation Director Chen Chang-wen, an attorney, has denounced the move as "bending the law well past the breaking point."

The China Aviation Development Foundation is injecting funds into the Taiwan High Speed Rail System. This has destroyed nearly every route and flight on the western half of the island. The highways can no longer bear the burden. But the Taiwan High Speed Rail System continues to bleed red ink. Everyone considers the Taiwan High Speed Rail System a fact, a fait accompli. But a assessment of its ultimate worth has yet to be made. The Taiwan High Speed Rail System's original shareholders no longer support it. Do we really expect China Steel to support it? Chang Chia-chu has finally made a decision to clean up the mess left by Lin Wen-yuan.

China Steel's investment was politically motivated. How sad. Actually, Yang Chiu-hsing was right. He's merely a little late. He's confused about who compelled others to take into account political considerations. Hopefully China Steel will no longer need to do so. Hopefully its current managers will be able to bring order out of chaos, and give their shareholders a fair deal.

2008.12.12 03:15 am



投 資喊停,等於中鋼已經認賠了,只是找個停損點而已。在商言商,不是連菜籃族買股票都會有「停損」的常識嗎?現在所有的公司都在開源節流,就算企業體質一向 不錯的中鋼也受國際環境拖累,不但減產,還取消不休假獎金的慣例,員工輪流排年休,上下同心咬牙守住「不裁員不減薪」的底線。這種時候,中鋼若考慮停止那 些高虧損、獲利展望不佳的「非本業」投資,其實亦是應變圖存的當然之理。

既說是「政治考量」,那就拿「政治考量」替中鋼算算這幾筆帳。楊 秋興說停止投資寶來旅館是政治考量,乃因眾所周知,標得寶來旅館的皇昌營造與扁家交好,而這項投資是在另一位「與扁家交好」的中鋼前董事長林文淵手中定案 的。仔細追究,堂堂鋼鐵公司去投資溫泉旅館,到底是當年的「與扁家交好」是「政治考量」,還是虧損後的停止投資是「政治考量」?


中 鋼多次釋股,號稱民營化,但從人事到投資決定,都在「假民營,真國營」的包裝下為之;轉投資千奇百怪,充滿了「配合政策」的苦衷。投資溫泉旅館是一例,巨 額投資高鐵也是一例。中鋼為此投資至今虧損五十七億,若非底子硬,誰吃得下此種賠累?高鐵還要指稱「一次提列虧損不合常理」,其實與楊秋興所說「政治考 量」同樣的道理,中鋼過去數年隱忍著未列虧損,恐怕才是為了美化帳面的「不合常理」之舉吧?中鋼投資高鐵如此忍氣吞聲,難道不是因為過去數年揹負著「政治 考量」?

高鐵如今受民眾倚賴甚深,是台灣近年的重大公共建設。但財務方面的黑洞至今難以見底,過去多少公、民營企業「不計盈虧」加入投 資,究竟出於何種「考量」,恐怕充滿了難以說出口的故事。中鋼直到今天揹不起這個重擔了,終於叫停,其他的投資者難道沒有「有苦難言」的私下感受?就以轟 動一時的航發會投資高鐵爭議來說,二十年前由華航大股東捐出持股成立航發會,以「協助中華民國航空事業發展」為宗旨,竟也被迫投資四十五億元於明明與航空 業為競爭對手的台灣高鐵。此一過程粗暴無理,明目張膽的違法之處,曾引起航發會首任董事之一的陳長文律師為文斥責「枉法到如入無法之境的地步」!



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