Thursday, October 2, 2014

Tsai Cho-yung Scandal: Clues to Wen-Je Ko Private Accounts

Tsai Cho-yung Scandal: Clues to Wen-Je Ko Private Accounts
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
October 3, 2014

 Executive Summary: How many sins have been exempted from punishment by means of phony labels. In both the 402 and MG 149 scandals, physicians wore the halos of public service. They may escape prosecution because of their image as public benefactors. But how worthy of white robes are those charged with reforming the system and plugging the loopholes? 

Full Text Below:

The Wen-Je Ko MG 149 accounts scandal has exploded. As many as 402 accounts with the National Taiwan University Hospital have been found in violation of the "Charity Donations Destined For Social Welfare Funds Implementation Regulations." The Ministry of Finance says it never approved the establishment of MG 149. Yesterday the Taipei Prosecutor's Office summoned Ko account manager Liu Ru-yi for questioning. The Ministry of Education will also pay a visit to NTU to examine the 402 accounts. But this is an election year. Can the circumstances surrounding these accounts be brought to light? Is is doubtful.

The Ministry of Education, the Ministry of Health and Welfare, and the Ministry of Finance are each singing their own tune. Obviously the 402 NTU accounts have been relegated to no mans's land for some time. Business operations are overseen by the Ministry of Health and Welfare. Nominally they are governed by the Ministry of Education. The Ministry of Finance is responsible only for nuclear medicine equipment. Think about it. Even donations to the 402 NTU accounts were not reported. The MG 149 aspect was subject to even less oversight. Wen-Je Ko set up personal accounts and private accounts under MG 149. He mixed public accounts with private accounts, making mess even more difficult to unravel.

In recent years, large domestic hospitals have made improper use of charitable donations, for which they are currently under investigation. Two cases have received a great deal of attention. One. In 2003, Chang Mao-sung, former president of the Veterans General Hospital, misappropriated funds from 2929 secret accounts. Two. In 2011, doctors at the Tri-Service General Hospital and Veterans General Hospital used Academia Sinica member Tsai Cho-yung's "Siyuan Foundation for the Advancement of Education and Academics," and Li Hong's "Cheng Han Educational Foundation" to evade taxes. Over 500 physicians were involved. These two cases may help people understand the twists and turns of the Ko accounts.

The 2929 Veterans General Hospital accounts were established early on to prevent corruption and ensure quality health care. It set aside a certain amount from the surplus each year, to serve as incentives and benefits for physicians. But account management authority resided solely in the hands of the president and comptroller. When Chang Mao-sung served as president, he and Chief Accountant Yi Ping-tung repeatedly misappropriated funds. They used them for private investments and stock trades, then pocketed the funds. The amount was as high as 80 million NT.

The case came to light in 2003. Prosecutors spent more than two years investigating. They eventually prosecuted them for embezzlement. They sought a 15 year sentence for Chang Mao-sung. Predictably, the Shihlin District Court took over five years to hand down a verdict. The charge was changed to misappropriation of funds and the sentence reduced to one year and two months. Prosecutors appealed. The appeal process dragged on until last year. The High Court found Chang Mao-sung guilty only of business misappropriation. The sentence was further reduced to six months, then commuted to a fine. He did not even have to serve time. The case dragged on for more than nine years. Prosecutors sought a 15 year sentence, based in high ethical standards. Judges gradually whittled down the sentence. In the end his sentence was reduced to six months for a misdemeanor.

Now take the 2011 Tsai Cho-yung Si Yuan scandal. This was characterized as the biggest group tax evasion scheme by physicians in history. The case was relatively simple. The main problem was that physicians' incomes were too high. To reduce their tax burden, many Tri-Services General Hospital and Veterans General Hospital physicians put their money into two foundations, the "Si Yuan" foundation and the "Cheng Han" foundation, established by Tsai Cho-yung and Li Hong-chen. They received 20% tax deductions on their donations. Later, they sought research grants fom the foundations, for which they could receive 90% to 95% deductions. By putting the money in then taking it out, they made false donations, but received real tax benefits.

This case was uncovered by the National Tax Bureau and the Taipei Tax Contributions Department while pursuing tax evasion cases. They then submitted it to prosecutors. Tsai Cho-yung was an Academia Sinica member, and a former president of the National Defense Medical Center. Li Hong-yi was a National Defense Medical Center alumni. As a result, over 500 physicians, mostly from military backgrounds, were involved. So were hospitals throughout Taiwan. The large number of people meant a large volume of work, and slow progress with the investitgation. Little news emerged. Prosecutors said many physicians had no prior criminal records. They showed remorse, and were willing to make up for the taxes they evaded. They were usually not prosecuted.

Compare the above two cases to the Ko case. The Wen-Je Ko 149 MG case is a synthesis of these two cases. On the one hand they accepted donations. , On the other hand they fund studies. Physicians help each other. The Ko account also accepted vendor contriubutions. As far as account management, Wen-Je Ko has yet to be accused of misappropriation of public funds. But he single-handedly controlled account management, The account had little transparency. Consider the account usage rules. According to MG 149 provisions, a physician could first make a donation, then receive a subsidy. The rules stipulated a minimum balance. This mode of operation resembled Tsai Cho-yung's "phony donations, real tax evasion" model.

The Tsai Cho-yung scandal gobbled up three years of time. So far no visible progress has been made. So many physicians were involved in the case, justice system personnel felt they were dealing with a hot potato. Had the Tsai Cho-yung scandal erupted before their very eyes, Wen-Je Ko would have been more cautious about his own account. He would have modifed the regulations, and desisted from "phony donations, really tax evasion." Wen-Je Ko would probably walk. But hundreds of physicians are involved. He is still taking advantage of the opportunity, Thefore he has no right to talk the voters about morality.

How many sins have been exempted from punishment by means of phony labels. In both the 402 and MG 149 scandals, physicians wore the halos of public service. They may escape prosecution because of their image as public benefactors. But how worthy of white robes are those charged with reforming the system and plugging the loopholes? 

2014.10.03 02:01 am











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