Wednesday, November 15, 2006

The Politics of Persons

Hawat studied the fat round face across from him. "Feyd-Rautha," he said. "So that's the reason for the oppression now. You're very devious yourself, Baron. Perhaps we can incorporate these two schemes. Yes. Your Feyd-Rautha can go to Arrakis as their savior. He can win the populace. Yes."

Here's a typical article topic in the local media, this one from the Taipei Times dating from August of 2005:

"Premier Frank Hsieh (謝長廷) announced the change as part of the punishment measures for government officials in the wake of water supply problems in Taoyuan recently. He made the comments during the weekly Cabinet meeting yesterday morning.

The premier also accepted the resignation of Taiwan Water Corporation (TWC) Chairman Lee Wen-liang (李文良).

He did not, however, accept the offers to step down made by Minister of Economic Affairs Ho Mei-yueh (何美玥) and Water Resources Agency Director-General Chen Shen-hsien (陳伸賢).

"Lee's request was approved because the TWC is directly responsible for the water shortage this time, since its facilities could not function normally to maintain regular water supplies when needed," Hsieh said. "Lee is the head of the company, so he needs to take that responsibility."

In August of 2005 Thai workers on the Kaohsiung MRT rioted. The ensuing "scandal" forced the resignation of then-Labor Minister Chen Chu (now a candidate for Kaohsiung mayor). Chen Chu, a veteran of the democracy movement, resigned to "take responsibility" for the scandal. A couple of years before that, then Premier Yu resigned to "take responsibility" for problems in reform of local financial institutions.

I'm sure by now the reader has the drift. One of the patterns of Taiwanese politics is that while administrators come and go, the System goes on forever. The pattern is always the same, and commentators have repeatedly complained about it: such resignations never result in changes to the System. For example, despite Chen Chu's resignation, there was no fundamental shift in the treatment of foreign laborers. The real scandal was not that laborers were abused; it was that the abuse continues. But for the media and many locals, scandals are about officials themselves. They are almost never about policies. Thus, the System, through resignation, has a built-in safety valve that prevents explosions that might cause re-arrangements.

As everyone knows, President Chen's wife Wu Shu-chen was recently indicted for fraud and embezzlement in connection with the special accounts that over 6,500 officials in Taiwan are privileged to have. Today it was KMT Chairman and Taipei mayor Ma "Feyd-Rautha" Ying-jeou's turn to be grilled. It turns out that the good mayor Ma and his good officers have been doing exactly the same thing as the Chen family -- forging receipts. He has also placed the special funds in his personal accounts. Ma's defense, was, as always -- it's Taiwan. Everyone does it, so why shouldn't I? Nor can you blame him.

There are two issues here, and they are intertwined. First, what Ma and Chen allegedly did is perfectly legal. As ESWN translated a couple of weeks ago:

"(United Daily News) Among the receipts submitted for the state secret fund, the prosecutor discovered purchases of clothing and jewelry (such as diamond rings). Bian insisted that his family members did not purchase these items for themselves; even if they purchased the items, these were gifts for other people. When the prosecutor showed that the diamond ring was customized for the First Lady, Bian changed his tune and said: "I used the state secret fund to buy a gift for her." The prosecutor stated: "Although the state secret fund does not have any regulations against buying gifts for the First Lady, it ought to fall within reasonable bounds. Otherwise, the President can give the entire NT$50 million budget to his family."
Look at that last sentence. There is no rule against Chen buying presents for his wife out of state funds -- that is why the issue is "forged" receipts. Further, Chen argued that he had done so because of her sterling performance in a state matter. It might even be true. So what did Ma say?

"In response to questions from reporters about including money left in the fund in his declaration of property, Ma said he did so according to the Act on Property Declarations by Public Servants (公職人員財產申報法), which states that public servants should declare their property regardless of the sources of the money.

Ma said that he spent half of the monthly NT$340,000 fund, which requires receipts, on gifts for weddings, funerals and rewards for his employees.

The other half of the fund, which did not require receipts, went into his personal account."

Ma spent half the money on gifts for his employees -- perfectly legal -- and the remainder went into his personal account -- also perfectly legal.

Corruption, as I am so fond of pointing out, is legal in Taiwan, and thoroughly institutionalized.

This brings up the second issue: the focus on people instead of policies. Since the KMT had sent the prosecutor to question Chen about perfectly legal use of the state funds, the DPP retaliated by sending the prosecutors off to question Ma about perfectly legal use of state funds. Both sides keep the focus on people, and Taiwan's notoriously poor media obligingly goes along. After all, it is easy to simplemindedly focus on whether Chen or Ma or both should step down, and to moralize cheaply on it.

Yet the real issue here isn't whether Chen or Ma was dumb enough to download money from their personal slush funds to their personal accounts, it is the institutionalization of corruption on the island that permits them to contemplate appropriating state funds and gives them every opportunity to do so -- indeed, practically begs them to. The emphasis on official resignation is now brought into full focus: by insisting on resignations, the System by which officials divert State funds into their own pockets preserves itself intact. Just as in the Kaohsiung MRT scandal, when Chen Chu's resignation failed to create any System change, so it will be in this mess. Even if Chen and Ma both resign, and leave politics forever, the slush fund system will have preserved itself to ruin another generation of politicians.

UPDATE: BBC reports in its usual context-free way on the Ma interrogation.

Some opposition lawmakers say they are planning to lodge legal charges against senior officials from the ruling party, arguing that they had also misused expense accounts when they were county and city chiefs.

Yep, the slush fund scandal is still about people, not about policies....I love the way the term "Kuomintang Party" is laboriously written out each time -- the term "KMT" doesn't appear, though DPP is written out once and then abbreviated thereafter. Hasn't anyone told her that the T stands for the Chinese word for party? Nowhere does the article put into any perspective the problem of institutions. Of course, that goes without saying at the Beeb, which seems to have serious problems covering Taiwan.


Anonymous said...

It always amazes how so many of these officials resign in disgrace then get appointed to new positions of similar seniority a few months later.

Anonymous said...

Another accurate analysis. The more that comes out about this issue the more I believe that this is all about 'creative accounting' in Taiwan. I'll give you one real life example. The Taiwan branch of our company (a NASDAQ listed company HQ'd in the US) provides a benefit for employees of about $1K per year for travel. All you need is receipts to show that you actually spent the money on travel and you will get reimbursed. A Taiwanese senior manager saw this as a good opportunity to buy a new high performance bike - but that's not exactly "travel". The solution? Simple, buy the bike and have the store manager make the receipt out for 'camping equipment'. Done deal. The interesting part is that most everybody in the company must have known this as he talked about it freely. But does it matter if people know? Not really. Think about it - the company has budgeted the money to give to people as a benefit. It only needs a receipt as a paper trail so it can then write off the expense at the end of the year. So, the fact that this receipt-based creative accounting is institutionalized in Taiwan comes as no surprise to me.......

Anonymous said...

Nice post Michael.

Ma has spent the last few days insisting that he is not Chen. It's funny because YES HE IS. He too has access to a fund that he basically has discretion to lawfully spend however he sees fit! They are both being ensnared by a contradictory charge that says though you can do whatever you want, you must use REAL RECEIPTS! Wow.

Institutionalized, systemized problems are always the ones overlooked. It's like the inherent unfairness in elections in Taiwan where the KMT has a huge money stash that is KMT property while the DPP has to go out and raise its own and still get totally outspent. Everyone's numb to it so a fake receipt is seen as a bigger deal than the fact that these unsupervised funds that basically allow a mayor like Ma to create a loyal, obsequious following through the doling out of public money to those under him even exist in the first place.

And Chen's fund is no better obviously--secret diplomacy sounds like the American CIA and we all know how great the CIA has been to Central and South America and elsewhere.

Anonymous said...

So this whole stink over Chen is just a case of the pot calling the kettle black?

People who live in glass houses shouldn’t throw stones.

Anonymous said...

To discuss the foibles of Ma and Chen over these funds is to address the greater issue of transparency.

Anyone who does business with the Chinese (Taiwan or mainland) knows how far they will go to disassociate themselves financially in a deal.

Also in regard to any transactions you have to keep in mind that a decision may or may not be really that depending on whether it has passed muster with the family behind its maker.

Will we ever see good bookkeeping? More likely only if you get both sets.

tony said...

"Anyone who does business with the Chinese (Taiwan or mainland) knows........", It is a historical misunderstanding to call us Chinese because Taiwanese is not all Chinese. Most of our ancestors lived in Formosa 400 yeas ago, being called Ping-Pu. A little genes came from Chinese ancestors in Ming and Ching dynasty. We, native but not being classified as aborigines, are different from the mainlanders, 12% of population, who came with Chiang-Kai-Shek in 1949.