Punish Ting Hsin, but Uphold the Rule of Law
China Times editorial (Taipei, Taiwan, ROC)
December 11, 2014
Executive Summary: The Ting Hsin Group was unscrupulous. The public has a right to punish it. But public opinion is one thing. That does not mean the government can engage in gross exaggeration, pander to populist sentiment, ignore the law, and use the opportunity to expand its power and abuse the innocent. The Taipei 101 Building ownership issue is a relatively minor matter. The government becoming impatient and acting rashly in order to punish Ting Hsing is a far more serious matter. If this undermines Taiwan’s reputation for rule of law in the eyes of domestic and foreign investors, the cost will truly overshadow any perceived benefits.
Full Text Below:
The Ting Hsin Group (Wei Chuan) revealed that it plans to sell its 37% stake in the Taipei 101 Building to the Malaysian-based IOI Group. This raised alarm bells for three government head, including Finance Minister Chang Sheng-ho, FSC Chairman Tseng Ming-chung, and Central Bank president Perng Huai-nan. Together they stepped forward to oppose it. Taipei 101 is a Taiwan landmark, they declared. Its shares must not be sold to foreign investors.
The Ting Hsin Group rancid oil scandal provoked national outrage. Enormous social pressures led to operating difficulties. The subsequent financial pressures forced the Ting Hsin Group to sell off its 101 shares. The building commands a high price because real estate prices have skyrocketed in recent years. The sale of its shares is sure to be profitable. Such is the nature of the market economy. But the Ting Hsin Group profiting from the sale has made the public angry. The result has been political pressure on the new cabinet. That the three officials would make such a statement is understandable.
The Ting Hsin Group has provoked public anger. But is the government acting in accordance with the law? That is another matter altogether. If 101 shares are traded on the market, there will be buyers and sellers. Any trade will reflect market prices. The Republic of China, after all, is a nation ruled by law, which respects the fundamental laws of the marketplace. If the government wants the Ting Hsin Group to bear legal or social responsibility, it can prosecute its executives. But it cannot arbitrarily intervene in the transaction merely because it wants to punish the Ting Hsin Group or is angry at the buyer. The government cannot force the Ting Hsin Group to sell off its 101 shares, and also dictate who may purchase them. Otherwise what will it be, other than a dictatorship?
IOI has yet to submit an application to the government as a foreign investor. Yet government officials have already declared that foreign investments are unwelcome and will not be approved. They were clearly pandering to populist sentiment. The Ting Hsin Group’s rancid oil scandal provoked public wrath. But the government was actually the first party to act irresponsibly. It failed to detect the problem before the fact. It provided no solution to the problem after the fact. Its prosecution of the case was inept. It was impotent in the face of public anger. It has no right to posture as public savior, when in fact it was one of the guilty parties. It has no right to use the opportunity to become the de facto owner of the Taipei 101 Building. It has no right to use the opportunity to increase government control of the Taipei 101 Building. Foreign investors have yet to submit applications. Yet the government has already intervened and declared that it will not allow any such investments? What was their legal basis for not allowing such investments? If the government acts without any legal basis, is not merely rash. That is an abuse of public authority in the market place.
Peng Huai-nan, the president of the Central Bank has long been respected by the public. Yet he meddled in the case. He declared that Taipei 101 is a Taiwan landmark, therefore “it is best owned by our own citizens." This arrogant display of central bank exchange control authority was shocking. President Peng said that in the event no laws applied, other means to prevent foreign ownership should be sought. He clearly realized that he lacked any legal grounds, or at least was not aware of any legal grounds. Yet he was determined to act regardless. His behavior calls for public condemnation.
Finance Minister Chang Sheng-ho knew the ministry had no authority to decide who sold what shares to whom. Yet he argued that since IOI "intended" to contact other shareholders to obtain the right to operate the building, it was not purely a financial investment, and expressed his personal opposition to the Investment Commission. He clearly lacked any understanding of the rule of law. Government-owned shares may compete with the IOI franchise in the market place in many ways. But if the government abuses its public authority to prevent IOI shares from participating, then a player has become the referee.
The newly installed Minister of Economic Affairs argued that foreigners must invest in accordance with the provisions of the law. The law prohibits foreign investments that “have adverse affects on national security, public order, good morals, or national health." His comment was particularly unbelievable. How can the Taipei 101 Building possibly “have adverse affects on national security, public order, good morals, or national health?" How can foreign ownership of a Taiwan Landmark be contrary to public order? What manner of legal interpretation is this? The Ministry of Economic Affairs is responsible for auditing foreign investments in this country. If it adopts this kind of closed door, nationalist attitude toward law enforcement, how many foreigners will be willing to invest in Taiwan? How many foreigners will be willing to humiliated by a government that show so little respect for the rule of law?
The government has long adopted this attitude toward enterprises involving public shares and government participation. How many local Taiwan companies will be willing to cooperate with the government in the future? The ruling administration endlessly trumpets its ambition to boost the economy, to internationalize, and to liberalize. Yet three officials responsible for foreign investments have demonstrated their utter disregard for the law, engaged in hyperbole, and acted upon whim. How can such a ruling administration attract foreign investments to Taiwan? How can we still talk about international competitiveness?
The Ting Hsin Group was unscrupulous. The public has a right to punish it. But public opinion is one thing. That does not mean the government can engage in gross exaggeration, pander to populist sentiment, ignore the law, and use the opportunity to expand its power and abuse the innocent. The Taipei 101 Building ownership issue is a relatively minor matter. The government becoming impatient and acting rashly in order to punish Ting Hsing is a far more serious matter. If this undermines Taiwan’s reputation for rule of law in the eyes of domestic and foreign investors, the cost will truly overshadow any perceived benefits.