Friday, December 09, 2011

KMT Smear Campaign Moves Into High Gear? =UPDATED X 2=

Today's biggest news was the KMT accusation that Tsai had broken the law and profited illicitly from her position as Vice Premier years ago.....
Tsai became chairwoman of Yu Chang Biologics Company in 2007, months after she left the position of vice premier in the DPP administration. Critics alleged she broke the revolving-door clause barring government officials from holding top positions at companies within three years of their resignation if they had had dealings with it during the five years up to their leaving government.

Tsai said she had actually helped the government make NT$1 billion (US$33 million) within three years. Neither she nor her relatives had invested in the company and made any huge profits, she told a news conference in Tainan Friday.

Her part in the Yu Chang launch had been investigated already, so the recent spate of accusations was just the ruling Kuomintang trying to damage her reputation one month ahead of the presidential election, she said.
The Taipei Times has a very detailed discussion of what happened. Tsai approved funds for a biotech firm which, after stepping down from the Premiership, she became Chairman of. The DPP explained that actually Tsai didn't violate the clause in the law, and rejected accusations by the KMT that Tsai had made gazillions from the firm. Apparently things couldn't have been too bad, because the KMT Administration of President Ma also invested in the firm, and the government made a good return on its investment to boot.

This is, I am told, an accusation that the KMT has tried before in elections Tsai was involved with. In other words, it was DOA when it was made a couple of years ago. There is a second accusation with this one which may also pop up one of these days. Lookin' forward to it....

Thing is, Tsai became Chair of TaiMed in 2007. Four years ago. Her move into the post was open and public. At the time the government was hoping to encourage the biotech industry. Here's a 2009 Taiwan Panorama piece:
Then, in July 2007, the Legislative Yuan passed the Act for the Development of Biotech and New Pharmaceuticals Industry. Genentech announced that it was acquiring Tanox and its patents, including that to TNX-355, the following month. The outlook for the domestic biotech and new pharmaceuticals industries looked bright, and there were constant rumors that Genentech was planning a joint venture with a Taiwanese firm.

On the evening of September 12, 2007, the National Development Fund announced that it was taking a 40% stake in TaiMed Biologics, a company that would be formed the following day. TaiMed named former vice premier Tsai Ing-wen its first chair and TNX-355, acquired from Genentech for US$100 million, its first product. Ho, Academia Sinica president Wong Chi-huey, and Patrick Yang, Genentech's Taiwanese executive vice president, were all instrumental to the deal that got development of TNX-355 going again.
See any hint of shenanigans there? Wait a sec.... Check out this Commonwealth magazine piece, which celebrates the close coordination of the biotech industry and government as new regulatory frameworks were coming into existence to permit expansion of the industry in Taiwan and remove barriers to cooperation. Tsai herself "played a critical role" in getting the regulatory and legal framework changed. The laws allowing business-government exchanges were loosened, for both scientists and other forms of personnel. A month later Commonwealth notes:
Lastly, they brought onboard expert negotiator Tsai Ying-wen as chairperson of the board.

Though she had no previous experience in the biotech industry, Ho says that Tsai possesses a special ability when it comes to the power of persuasion.

The team sent Tsai to the United States for a two-week “crash course” in August. With Chen Lan-bo acting as host, Tsai paid visits to important biotech businesses, educational institutes and Wall Street as well. After meeting with Tsai at that time, Chen relates, a few of his Wall Street friends who had been unwilling to help out in the past all pledged to spare no effort in assisting Taiwan.

Tsai's talents as a communicator and harmonizer were applied to great effect during the final stage of talks with Genentech. Chen says that for many things, “she takes a deeper view than the American lawyers and is able to make the details even clearer than the American biotech companies.”

Participating scientists maintain that the integrity and impartiality for which Tsai is renowned are a requirement for doing business in the biotech sector. “I think this is a business to stay for the long term, and integrity is a very important quality for a successful business in the long term,” says Ho, adding, “Short term, I think you could skip on the integrity... and then forget your vision. That's possible. But we are not doing this.”
Commonwealth specifically lauds Tsai for her integrity and impartiality which it says she is renowned for!

Finally, in 2008 when Tsai was running for DPP Chair, the China Times attempted to make an issue of Tsai having a conflict of interest since she had become Chair of the DPP while being Chair of TaiMed. This attempt died stillborn. More importantly, the China Times didn't make any concrete accusation that Tsai had any conflict of interest in her position as premier or of violations of the Civil Service Act, because there were none that could be made! If Tsai had really done anything identifiably wrong, she'd have been enthusiastically roasted by the KMT and its toadies as another example of "Chen Administration corruption." But the reality is quite the opposite: everyone seemed quite happy that TaiMed had secured the services of the talented Tsai Ing-wen.

In other words, this has every appearance of being a smear, pure and simple.

Oh yeah, the "Ho" in the article above, who is the firm's scientific founder? That is David Ho, one of the world's top scientists, who invented the drug cocktail approach for halting AIDS (more on it in this 2009 article). According to all sides, he was one of the scientists who brought her into the firm.

Fortunately, the KMT offered us some comic relief on the mudslinging front: the revelation that nine years ago the wife of DPP VP candidate Su Jia-chyuan had attended a party where there were strippers when he was the Pingtung County Chief and she an official in the land office. O the horror! Su promptly apologized for the sake of public morality as irony meters all over Taiwan exploded, given the longstanding involvement of A Certain Political Party with organized crime and prostitution (and political killings, martial law, etc). Not to mention that plenty of politicians from all parties have visited houses of ill fame..... given how modern it makes his wife look, this accusation will no doubt help Su.

Only a few weeks left, and it appears that Tsai has the edge on Ma. The nastiness is only beginning.....

UPDATED: Taiwan Echo observes in the comments:
Tsai in her press conference said that she didn't gain unusual/out-of-ordinary profits from her investment.

When reporting that, NowNews twisted it into that: "I didn't gain profit from that investment."

It then used by the KMT to accuse her of lying.

My article (in chinese) on how Tsai's word is twisted:

今日新聞篡改蔡英文談話內容誤導讀者
http://blackrain.skycity.cc/2011/12/10/10670.html

NowNews, previously "behaves" like non-partisan, reveals that it hardly is. The journalist who twisted Tsai's word is no one else but NowNew's News Center Director as well as Deputy Editor.

That simple twist helps to lock the blue extremists in a mentality of hatred against Tsai.
UPDATE II: Lots of great comments. SY notes:
My understanding of the matter is as follows:

1. At the time, much was discussed about how to secure more technologies for Taiwan to face the Standort competition from other Asian nations. Bio tech was identified as one of the desirables.

2. The Taiwanese law makers set the rule that the government could only contribute to less than 40% of the total venture capital.

3. At the time, bio tech was seen (still is seen) as high risk and only profitable over long term if at all successful. Most Taiwanese venture capitalists were not willing to participate. Therefore, there was not enough private venture capital to get the project going.

4. The key scientists, via the help of the Nobel laureate Yuan Tseh Lee and others, persuaded Ms. Tsai to get involved. She contributed NT$220 millions to get the total private capital contribution to the reuqired 60% of all to get the proejct started. She was also asked to act as the CEO with the primary task to negotiate with Genetech due to her international negotiation experiences (key word: GATT/WTO.)

5. At the time, both Japan and South Korea were competing to gain access to the technology. Therefore, the project file was classified.

6. Once the negotiation went through and the business got substantially going, other private capitalists became willing to participate. When Ms. Tsai had achieved her goal (to kick start the venture), she pulled herself out of the project. She was not salarized for her work as CEO. She got her initial investment (NT$220 million) back with NT$10 million (US$333K) as interest payment (which worked out to be about 3.5% annualized; a pretty humble earning, given the fact that the company was doing well and has been since.)

To my eyes, the Yu Chang project is a huge asset, not a liability, to Ms. Tsai. I'd mark it clearly in my resume. Ms. Tsai is too humble to brag.
Read all the comments, some good perspectives. I suspect Taiwan Echo is right -- once word gets around, this will hurt the Ma campaign in the end.
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36 comments:

Anonymous said...

They have sent the prosecutors out to generate the cloud of suspicion, founded or not.

Remember they did the same thing during the last round of elections by sending prosecutors to the offices of several prominent DPP politicians in search of missing files. Where did the prosecution go with that? Oh yes, it went away after attracting international attention.

Taiwan Echo said...

Tsai in her press conference said that she didn't gain unusual/out-of-ordinary profits from her investment.

When reporting that, NowNews twisted it into that: "I didn't gain profit from that investment."

It then used by the KMT to accuse her of lying.

Taiwan Echo said...

My article (in chinese) on how Tsai's word is twisted:

今日新聞篡改蔡英文談話內容誤導讀者
http://blackrain.skycity.cc/2011/12/10/10670.html

NowNews, previously "behaves" like non-partisan, reveals that it hardly is. The journalist who twisted Tsai's word is no one else but NowNew's News Center Director as well as Deputy Editor.

That simple twist helps to lock the blue extremists in a mentality of hatred against Tsai.

Feiren said...

I don't want to lend credence to a KMT smear, but I'm troubled by Tsai's involvement nonetheless.

She invested her family's money in the scheme. The government invested money. She made around NT$10 million plus her fees. She mentions nothing about this episode in her book. Instead she claims that she was enjoying being a homebody reading novels.

Did she really have deeper insight into this business? This sounds suspiciously like Confucian fawning over officials.

Finally, I'm troubled by her apparent lack of judgment in this matter. Given the accusations tainting the entire Chen administration at the time, why would she get involved with an investment like this? Surely she should have seen that this would create an impression of a conflict of interest no matter how noble her intentions were.

Taiwan Echo said...

The attorney already launches investigation. They may have to call and interrogate Bill Gates, 'cos he is one of the investors in this case.

Michael Turton said...

Feiren, I agree with what you say, and plan to post on this. But the KMT doesnt give a shit, they simply want to use it as a smear. All of this could and should have come out years ago. Using it now is just a smear.

I find it even more troubling that she doesn't mention it in her book.

Michael

Taiwan Echo said...

@Feiren,

Obviously, the KMT's smear campaign did have its effect, that is, casting doubt on Tsai.

Let me try my best to answer your doubt, such that no more misleading is carried on.

She invested her family's money in the scheme. The government invested money. She made around NT$10 million plus her fees.

That investment needs 60% of non-gov investment. After that is confirmed, the gov will then invested the rest 40%.

They were competing with time (that is, competing with other countries) at that moment. It got to be done before some deadline, otherwise, the beggest foreign cooperator will turn away.

At that time, the negotiation has been going on for ~6 months. If that goes away, Taiwan will have to (1) wait for next chance and(2) resume the entire negotiation process, which might add couple of years and would probably will never have a chance for Taiwan's scientists to compete with the world.

So she threw in her family's assets to "save" the project -- making it reach that 60% in order to get the gov fund, making enough funds in time to sign the business contract.

If not for her investment, it's very likely that Taiwan will lose compitition edge on that direction forever.

She mentions nothing about this episode in her book. Instead she claims that she was enjoying being a homebody reading novels.

What's wrong about mentioning nothing ? And, what's wrong with investing on something, and being a homebody reading novels at the same time?

Mind I say, this is a bit witch-hunt.

Did she really have deeper insight into this business? This sounds suspiciously like Confucian fawning over officials.

She was not just an invester. She was actually recruited to the company for her expertise on negotiation, especially on the field of economic negotiation. According to documents, expertise like hers was exactly what the company desperately needed. People involved said that if not because of her expertise and personality, the company will not be able to get so many foreign investor/cooperators. Bill Gates was one of them.

Finally, I'm troubled by her apparent lack of judgment in this matter. Given the accusations tainting the entire Chen administration at the time, why would she get involved with an investment like this? Surely she should have seen that this would create an impression of a conflict of interest no matter how noble her intentions were.

At the time when she invested that, and was recruited as the chief negotiator, she never had the plan to go back to the politics. Some time after she went to work in that company, at the time the DPP was re-elected chairperson, Lee Yuan-cher (李遠哲) visited her, persuaded her to campaign for the chairperson. It took Lee a hard time to complete that mission, 'cos Tsai at that time "like to enjoy reading at home" at the same time when she "was the chief negotiator and an invester of the company."

That is, at the time of her involvement on the company, she planned to walk out of the politics forever. The KMT will then see her as a "source of $$$", but not a threat to their power. That's the context of what happened at that time.

Taiwan Echo said...

"I find it even more troubling that she doesn't mention it in her book.

Michael,

Tsai is not the person who would brag about something she thinks she was helping.

At the time when the news about that she was among those who took 18% came out, her supporters urged her to publicize the list of recipients to whom she donate her 18%. She insists not to do so, 'cos that will have a lot of unpredictability, including some people found out that she didn't donate to them, etc.

Reveal a complicated issues like the negotiation of high tech like Yu Chan with many serious foreign contributors might also expose some commercial secrets that would hurt a lot of people as well as damage future cooperation chance.

Tsai knew this more thoroughly than most people in Taiwan. This is also to answer Feiren's doubt in previous post about Tsai's judgement -- Tsai, in fact, has a lot more "senses" than we see.

I can throw in one example. Earlier this year, Tang Fei (唐飛), Chen Shui-bian's first premier, also a deep bluer, came out (after years of hibernation) to criticize the DPP on some stuff. People expected he will elaborate more. But, then, Tsai told him just one thing:

"There are stuff as serious as national security issue that relates to relationship with other countries. Be careful not to step over the line."

Since then, Tang never said another word again. It just shows that she knew exactly where the line is, and she will never cross it (or, play snatch) just to save her own ass.

Taiwan Echo said...

Ma's desperate move on this Yu Chan Bio tech will most probably the final breath in his campaign. I heard a lot of complaints about this against Ma, especially those bio scientists who usually don't pay much attention on politics. They knew how hard it is for Taiwan to build a bio tech against those big and advanced countries. They appreciated Tsai's effort to make that dream come true. But now, after Tsai did so much for the country and the bio field, Ma is gonna jail her ?

I believe we will see how much Ma's support dive in a couple of days. Like I said in one of my posts, Ma's final vote percentage will probably be 35%. I am seeing that he is making every effort to reach down to that goal.

Michael Turton said...

Thanks Taiwan Echo. I also pointed out to Feiren in a private email that the CEO should be invested in the company s/he is running, because firms perform better that way.

The problem is, as always, the appearance of a problem. Reality is more complex. But you've helped me think about this more clearly. Thanks.

Anonymous said...

I would also add that anything that shows Tsai as a proactive and experienced promoter of Taiwan's economic infrastructure should be seen in a positive light, since the KMT strives to convince business people that only they can "save" the economy.

SY said...

The "Yu Chang" project (not a "scheme" as some commentators put it) was a venture capital project with governmental involvement, which is often required in a small country such as Taiwan when seeking to secure prioneer technology. It has happened before with wafer fab tech (laying foundation for the rise of the Hsinchu Science Park, particularly that of TSMC; please read the history of TSMC for details). Same with wind power tech, solar power tech as well as bio tech.

My understanding of the matter is as follows:

1. At the time, much was discussed about how to secure more technologies for Taiwan to face the Standort competition from other Asian nations. Bio tech was identified as one of the desirables.

2. The Taiwanese law makers set the rule that the government could only contribute to less than 40% of the total venture capital.

3. At the time, bio tech was seen (still is seen) as high risk and only profitable over long term if at all successful. Most Taiwanese venture capitalists were not willing to participate. Therefore, there was not enough private venture capital to get the project going.

4. The key scientists, via the help of the Nobel laureate Yuan Tseh Lee and others, persuaded Ms. Tsai to get involved. She contributed NT$220 millions to get the total private capital contribution to the reuqired 60% of all to get the proejct started. She was also asked to act as the CEO with the primary task to negotiate with Genetech due to her international negotiation experiences (key word: GATT/WTO.)

5. At the time, both Japan and South Korea were competing to gain access to the technology. Therefore, the project file was classified.

6. Once the negotiation went through and the business got substantially going, other private capitalists became willing to participate. When Ms. Tsai had achieved her goal (to kick start the venture), she pulled herself out of the project. She was not salarized for her work as CEO. She got her initial investment (NT$220 million) back with NT$10 million (US$333K) as interest payment (which worked out to be about 3.5% annualized; a pretty humble earning, given the fact that the company was doing well and has been since.)

To my eyes, the Yu Chang project is a huge asset, not a liability, to Ms. Tsai. I'd mark it clearly in my resume. Ms. Tsai is too humble to brag.

Anonymous said...

This makes Tsai not only look intelligent and capable, but it also shows the lengths she will go to support Taiwanese businesses. She can now demonstrate her negotiation prowess, which appears to be far more effective than Ma Ying-jiu's bend-over and take it approach.

She put her own money on the line to benefit Taiwanese companies. What a woman!

N.J said...

this issue is going to be declassified next week. more truths might be revealed.

imo Tsai and her family should not get involved in investing into Yu Chang. it was obviously a conflict of interest even if she was trying to save the project.

Taiwan Echo said...

@N.J. it was obviously a conflict of interest even if she was trying to save the project.

There are many articles discussing the law of conflicting interest in this case, and the conclusion is that Tsai's involvement is NOT a conflict of interest.

People should update their knowledge when there are updated info available.

Taiwan Echo said...

@N.J,

Here is an article to help you clarify the misunderstanding on the "conflict of interest" :

利益衝突迴避法與旋轉門條款的正確認識 [黃帝穎]

Taiwan Echo said...

@Michael,

You are welcome. SY's summary is a good piece of work.

The KMT questioned that why the project was classified as "confidential," and they announce that they are gonna declassify it next week.

That moves is played in such a manner that it looks like Tsai was in something illegal, and the KMT is playing the role of justice.

In reality, this is an old case that the KMT has already beaten it before. Besides, there is no need of confidentiality once the contract is signed. But the KMT didn't declassify it when they beat on it previously .... they keep that part until now, so they can manipulate it before the election.

Interestingly, one of a blue bloggers, 王榮霖, commented that, it's still couple of weeks before the voting. The KMT threw this subject out at this time, it's way way too early. He suspected that one or both things below are happening:

1) Ma's so desperate to save his rating, that they got nothing else they can do;

2) They keep something even bigger for the week before the election;

So, man, what's the level ... what it is called, I mean ... above the "high gear" ?

Taiwan Echo said...

An unconfirmed info says that Ma gov's persecution on this case enrages scientists. It could even result in a resign of the head of Academia Sinica in protest:

"國民黨一直要吵這個宇昌案 在中研院引起不小的反彈

據說 李遠哲今天也到院介入關切 中研院長翁啟惠則是很怒 除了要生醫領域的院士出來說明 還可能有更大的動作 這週 翁會先跟總統府方面先溝通 如果再吵下去 翁院長可能會親自出面 如果搞到宣佈請辭 總統府會很難看"

Tommy said...

Also, I wonder whether it was wise to break this story right before the VP debate. If you look on Yahoo TW, which draws stories from all of the local media, you will see that the VP debate, and the Piggy Banks, have edged out Yu Chang. The fact that there are documents to be declassified means that there will be more "sordid" details to release in the coming days, but, from the standpoint of making maximum impact with your news releases, perhaps the timing was not ideal. Could be very wrong though.

Michael Turton said...

Tommy, what if it was planned that way on purpose -- if the claims are forgotten, so is the refutation -- meaning that the stink still lingers.....

Taiwan Echo said...

Tommy,

Do you know that the DPP has called for a return and reunion of Piggie banks, in a gathering yesterday?

The Piggie Bank Trio movement was so successful, which might have contributed to a big rise of Tsai's support, and a big fall of Ma's, in the middle of October. The KMT must be so fear of it.

So, other than the possibility that the Yu-Chan was released to meet the VP debate, how many know that there was a recall of Piggie Banks?

If not many, then the KMT was successfully in terms of blocking that news.

Taiwan Echo said...

SY: The "Yu Chang" project (not a "scheme" as some commentators put it)

Some blogger goes one step further to call it "Yu Chang Scandal."

Anonymous said...

This story has been floating around for weeks and is truly old hat for those in the know. I wonder why the DPP does not expose el predidente spic and span's role in setting up the failed Penghu casino? Mr Clean took a large sum of cash from the Isle of Man-registered firm to do their bidding whilst visiting the U.K. on a pre-election visit.

Tommy said...

Echo, when I looked at the selection of news on Yahoo TW, I saw mostly info on the debates and the piggy banks. I didn't see much on Yu Chang. That was my point.

Taiwan Echo said...

Tommy, thanks for the info. Good to know.

Taiwan Echo said...

In today's two prediction contract groups in the future market, both betting on the "chance of winning", Tsai's score jumps up 3~4% -- a sharp rise -- in 3 days since the KMT started this Yu Chang attack, accompanying a fall on Ma's rating.

What's more dramatic is in Taipei. This Yu Chang conspiracy already turn Ma's rating fall below Tsai's in just 3 days.

Yes, even in Taipei !!!

Ma is committing suicide.

Michael Turton said...

Yup. It's really quite amazing, so amazing I am having trouble believing it.

Feiren said...

Taiwan echo:

I definitely agree about the timing of the story--the KMT media machine is in high gear right now and throwing a flimsy corruption story out to screen out any news on the piggies makes total sense.

Hopefully it will satisfy blue voters that the old corruption narrative is still working and that they will be able to party like it was 2008. Not!

Anonymous said...

@Taiwan Echo:
There are many articles discussing the law of conflicting interest in this case, and the conclusion is that Tsai's involvement is NOT a conflict of interest.

Sorry. It is conflict of interests, maybe not in the legal sense, but it is conflict of interests.

Is this a smear campaign by KMT? Definitely possible. However, all Tsai needs to do is to hold a press conference, explaining everything in details (that she believes her supporters need to know) in 30 minutes or 1 hour, and that's the end of the story. This way, a smear campaign becomes a boost for her honesty and integrity.

She chose to remain silent. She asked for it.

Michael Turton said...

Tsai has not been silent, and she has not asked for it. This is the usual dirty politics from the KMT side. Given that after the announcement, Tsai continued to rise in the prediction market, I'd say that the smart money is concluding the KMT is desperate and hoping that the public is as shallow as your comments, anon.

I suggest that you review SY's information. What in it is incorrect?

Michael

Feiren said...

It looks like Tsai has handled this one.

She strongly rejected the accusations, the public doesn't really care about or understand the potential conflict of interest, she was probably acting in the interest of Taiwan (what the non-blue public really cares about), and now, best of all, it appears that that Liu Yi-ru got some of the facts wrong.

A good sign that wasn't really all that important was that Apple Daily relegated the story to page 2 today.

The blues will continue to console themselves that the DPP is still corrupt. That's a losing strategy.

Taiwan Echo said...

@Anon,

Tsai didn't remain silent. She responded with a press conference in the very first day to explain everything when it broke out. The content and video of the conference are still on her website.

THere are several pro-blue TV journalist who keep spreading rumors that Tsai didn't make any clarification but ask her spokepersons to speak for her. This is a twist of facts, and you seem to be one of those who got twisted by them, too.

For the conflict of interests, what's wrong with following the law ?

Taiwan Echo said...

It turns out that the KMT forged the document to frame Tsai:

快訊/陳其邁出示原始文件 控劉憶如偽造文書
http://www.nownews.com/2011/12/13/301-2766168.htm

This is dirty to no end.

Btw, Tsai' "expect to win" index in the XFuture is rising up fast, thanks to KMT's Yu Chang conspiracy.

Taiwan Echo said...

Fieren, you are nice to say Liu Yi-ru got some of the facts wrong.

The date was not there on the original doc. It was typed later on to forge a wrong date.

Now the problem is: is Liu the one who did that ? If not, who did that ?

Anonymous said...

@Taiwan Echo:
For the conflict of interests, what's wrong with following the law ?

There is nothing wrong, but you forgot that following the law is the minimum requirement of a candidate. To show others you can be a leader, you need to be higher than that.

Take the U.S. politics for example. Herman Cain was accused of sexually harassed other women, and even one of them stood forward to say that she had a 10+ year affair with Cain. Legally Cain is not guilty. He is not even accused in the court.

What did Cain choose to do? He "followed" the laws, didn't he?

Michael Turton said...

There is nothing wrong, but you forgot that following the law is the minimum requirement of a candidate. To show others you can be a leader, you need to be higher than that.

Stop this, please. Tsai not only followed the law, she WAS a leader. When no one else would risk their capital, she put $220 million of her own project into the company to make it work. That's leadership. Then when she exited, she took out her money plus 3.5%. Amortized over the 16 month span of her investment, that's right about bank interest on a one-year CD. That's nothing, and doing positive good for Taiwan while taking nothing in return, that's leadership. Everyone involved praised her leadership and skills on the project, and no one involved doubts her integrity.

If the KMT started arguing that Tsai was actually a bright purple alien, you'd be here arguing that although no reasonable person could see her as bright purple, she was certainly a health shade of mauve.

Michael