Friday, July 24, 2009

Businessman connected to Chen in Scandal with Rudd of Oz

The Age reports on a Taiwan businessman close to Chen who paid for Rudd to fly to London and donated megabucks to the Australian Labor Party.
Kung Chin Yuan, a long-standing friend of former Taiwanese president Chen Shui-bian, flew Mr Rudd to London for two weeks in June and July of 2005 when Mr Rudd was Labor's shadow foreign minister.

The sponsorship of Mr Rudd came at a time when Taiwan was making efforts to boost its influence with Australia and other countries in the region.

Mr Kung, who is based in Brisbane, has been linked to a secret fund that helped bankroll unofficial Taiwanese diplomatic operations in Australia and the South Pacific.

At the time of Mr Rudd's trip, there was concern in Taiwan about contacts between senior Labor figures and mainland Chinese business interests. There was also concern about "pro-Beijing" comments made by Mr Rudd in mid-2004.

The Prime Minister's office has declined to answer questions about how long Mr Rudd has known Mr Kung, why he accepted the sponsored trip, who he met in London and whether Mr Kung had contributed to his fund-raising efforts. "Mr Rudd's interactions with Mr Kung have been entirely appropriate," a spokesman said.

Australian Electoral Commission records also show Mr Kung donated $120,000 to the Queensland ALP branch between 1998 and 2006.

In 2007-08, when Mr Rudd led Labor to power, Mr Kung contributed a further $100,000 to the federal ALP using the name Lawrence Kung.

The secret fund to which Mr Kung has been linked was, according to former president Chen, used to support Taiwan's efforts to secure diplomatic recognition in the South Pacific and gain influence in Australia.
The secret fund is what the prosecutors are accusing Chen of stealing. If Chen stole it, where did this money come from? Another charge against Chen is that they falsified receipts. Do you think that the Australian Labor Party gave receipts for the secret fund for the two donations? And do you think Kevin Rudd gave a proper receipt for his business class trip to London? In any case, as I have noted numerous times, the whole receipt thing was an obvious set up, since the rules were changed in '02 and no previous president had to give receipts for expenditures from the secret fund. Only Chen Shui-bian had to give receipts.

Last year I observed that it is rumored that one of the reasons the KMT is so interested in peering into Chen's funding flows is that Beijing wants to know where Taiwan's money is going. Take that, Beijing.


In 2006, a senior politician from the then Taiwanese opposition KMT party told a parliamentary committee that the Queensland-based Mr Kung had received $US625,000 ($A764,000) from Chen's special fund.

The KMT politician alleged the money sent to Mr Kung was used on Mr Chen's behalf to invest in Chinese real estate, not to carry out secret diplomatic work. But Mr Chen rejected the claim, insisting the fund was used to pay for secret diplomatic missions.

His denials were not enough to deter government prosecutors who have since 2006 pursued Mr Chen, his wife and aides over the alleged embezzlement of funds from the secret diplomatic account.

In his initial interviews with prosecutors, Mr Kung refused to disclose the identities of the "secret agents" receiving money from the fund for fear their lives would be at risk.

Taiwanese newspapers say Mr Chen later told prosecutors Mr Kung had received money to undertake secret diplomatic work at his request.

Mr Kung, who owns an exclusive property on Brisbane's riverfront and is a member of the Queensland branch of the Taiwan Australia Business Council, could not be contacted for comment. He has previously denied receiving money from Mr Chen's fund.

Mr Kung has reportedly refused six summonses from prosecutors to return to Taiwan to testify in Mr Chen's case. Instead, he has faxed a statement in which he said he had never received money from the fund for secret diplomatic work.

Taiwan prosecutors have obtained invoices that allegedly bore Mr Kung's name and were used by Mr Chen's family to claim money from the presidential fund.

Let's see... a KMT legislator claims that Chen gave the money to Kung to invest in Chinese real estate. That legislator was Lee Ching-hua, brother of Diane Lee, the legislator with the US citizenship. The Taipei Times reported on this in 2006...

Chinese Nationalist Party (KMT) Legislator Lee Ching-hua (李慶華) told the legislature's Organic Laws and Statutes Committee yesterday morning that a reliable source told him that the president had wired NT$20 million (US$625,000) to China-based businessman Kung Chin-yuan (龔金源).

The legislator claimed that the money came from President Chen's special allowance fund and was actually used to invest in real estate in China.

Lee Ching-hua said he'd resign if he was wrong. Yeah, right. Needless to say, Lee's anonymously sourced claim has been shown to be fiction. The money was spent where Kung said it was spent.

The donations to Labor came at a time when Australia was following the shortsighted policy of opposing the dollar diplomacy between Taiwan and China in the South Pacific. Now that Taiwan has essentially halted its diplomatic programs, China is consolidating its position in the South Pacific island states. And everyone knows that Chinese money is not corrupting, and China always supports clean, democratic politics in the states in moves close to.

The reality is that Taipei was suppressing Chinese influence in the Pacific at no cost to Australia itself. Stupid.
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Craig Ferguson (@cfimages) said...

This doesn't seem to be getting much attention in Aust so far. Rudd actually declared to parliament in Aug 2005 that he received the trip from Kung, so it's not like it was a secret. There is some talk that people may try to look into his time as Senior China Consultant for KPMG in the mid 90s.

The 2 journalists who wrote the article are both known and respected as very thorough investigative journos, so there's a very good chance that a large part of what they say is correct. These are not the kind of journalists who write without thoroughly investigating first.

At the time there was a right-wing conservative govt in power (Rudd, now PM, was then in the opposition party). They were interested in cozying up to China as there were some huge trade deals going through between Aust and China at the time. If I remember correctly, one of them represented one of the biggest mining deals in Aust's history and was worth billions.

The policy of opposing $ diplomacy came about more for economic and trade reasons than any concerns about Chinese or Taiwanese influence. Taiwanese money going to the Sth Pacific states was just as corrupting as Chinese money - don't forget that quite a few of those Sth Pac. islands are only a step away from being failed states. I generally don't agree with anything the previous Howard govt did, but in this case, they probably got it right. Australia's influence in the Sth Pac. is way too strong for it to matter - half of those countries would be in civil war today if it weren't for Australia's continued presence.

Michael Turton said...

I know that Taiwanese money was just as corrupting as Chinese money. What I'm arguing against is the Aussie gov't claim that ending dollar diplomacy would curb corruption. Clearly not the case, since under Chinese influence corruption is even more rampant than under $$ diplomacy.

Further, Aussie's security situation is not advanced by increased Chinese influence in the South Seas, which was what Taiwan was busy suppressing at no cost to Oz.

That's basically what I am trying to say. It was shortsighted of Australia to oppose dollar diplomacy.


Craig Ferguson (@cfimages) said...

Ok, I see where you're coming from. I misunderstood part of it.

I wasn't aware that Aust used curbing corruption as the reason for opposing S diplomacy. (That's not to say they didn't say that, I just wasn't aware of it). It was pretty much no secret that their opposition to it was solely because they were jumping into bed with China.

Aust's security situation is not really altered by the presence of any country in the South Pacific. The US are about the only country who could threaten Aust's security and that's obviously not likely to happen.

What the $ diplomacy did was pit the China funded recipients against the Taiwan funded recipients and probably contributed to at least one coup that Aust then had to go and sort out. For Australia's interests (and the interests of the Pacific nations) a mini version of the "Great Game" is less desirable than the corruption that still goes on now.

Julian said...

Opposing "dollar diplomacy" has been a mantra of both sides in Taiwan, depending on who was in power. It's a motherhood-and-apple-pie issue, as we say in the US. But it seems to me the substantive question is one of efficient use of public resources and long-term efficacy of this kind of diplomacy. No doubt many an African, Central American, and South Pacific foreign minister or head of state has been turned with such pratices over the years, often with benefits to both sides beyond the funding or sheer cash that traded hands. Even the most knowledgeable foreign ministers in Taiwan from Frederick Chien to Jason Hu have indulged in this because it does often get results, even if you end up chasing down some unsavory characters. But the stakes are high, and the moralizing that comes from LY members is too often uninformed and hypocritical, since they typically look the other way when it's their own party in power. Michael's points about Taiwan helping Australia keep Chinese influence at bay in the South Pacific is an excellent one. It's too bad the politicians and pundits can't see it this way, too.