From: lwang@mariner.amc.edu.au (Luo Wang)
Subject: Taiwanese "money pollution" asphyxiating KMT
Organization: Australian Maritime College
Date: Mon, 4 Jan 93 05:17:13 GMT

Forwarded by Luo Wang
Written by Michael Byrnes for Financial Review

After an election where the cost of buying a single vote in Taipei was often
more than $A100 and where some candidates reportedly spent more than $A10
million on their campaigns, the business empire of Taiwan's ruling
Kuomintang part is underfire.

The strong electoral performance of the opposition Democratic Progress
Party and the weak showing by the KMT has added fuel to unrest over the unusual
mix of big business and political power in Taiwan's ruling elite.

Accusations of cozy relations between leading KMT candidates and big
business were a major contributor to the erosion of the KMT's share of the
vote to just 53 percent and the boosting of the impoverished DPP's share to
31 per cent in the recent poll.

In Taipei, the business-politics link extends far beyond a normal
relationship between government and business.

According to the DPP, the KMT is richest political party in the world. After
nationalising most enterprises in Taiwan when it took over almost 50 years
ago, the KMT today has an estimated minimum  of $US15 billion in assests.

It has enterprises active in financial services, insurance, cultural
pursuits, broadcasting, construction, electronics, pharmaceuticals, cement and
other industries.

"Like the tentacles of a squid, [KMT party enterprises] penetrate every
sector of Taiwanese business, " DPP political material claims.

Owenership of broadcasting assets became a special  focus of political
attention in the recent election campaign.

Detailing KMT media investments, the DPP claims that the KMT owns one of
Taipei's three television stations, a radio network, a film studio and a
major daily newspaper.

The KMT puts a slightly different view.

"All of the three Republic of China TV companies are private commercial
stations ... that rely purely on the profits from advertising and
services [and are] independent in administration and finance," is material
states.

But a Taiwanese publication, Wealth magazine, last year estimated that,
through about six major holding companies, including the biggest entity,
Central Investment Holding Co, the KMT holds investment assets of $NT 112.5
billion($A6.25 billion) and has interests in companies with assets worth
more than $NT 400 billion.

One of the KMT's most recent forays has been into the financial services
industry, through its Kuang Hwa Investment Holding, Chii Sheng Industrial,
Jen Hwa Investment Holding and Central Investment Holding. It has built a
big stake in a bank, Bank SinoPac.

Cynics see the KMT's push into finance as an adjunct to the Taipei
Government's deregulation of this sector.

Even in the murky Asian underworld of political and business connections,
where Malaysia's ruling political party UMNO has a wide-spread and
well-known commercial reach, the scale of the KMT's business empire is
regarded as unique.

A week before the Taiwanese vote, a group of liberal scholars knows as Cheng
She published a report which listed 56 candidates with close connections
with business groups, many of them private consortiums in real estate. It
listed 42 as members of the KMT and four of the DPP.

All this heightened the significance of the big election wins by former
government ministers Mr. Jaw Shau-kong and Mr Wang Chien-shien, who ran
without KMT party backing on corruption-clean-up platforms.

But another background theme to the recent poll was the election of the
legislature of a third force, known in Taiwan as" golden oxen".

Separate from the old money of the KMT but still guided by what Taiwanese
are calling "money pollution, the rise of the "golden oxen" shows the
power of cash amid apparently new politics may be slow to change.

Cash, also, may prove to be glue which helps hold the KMT together. Many
members of the KMT are understandably reluctant to leave such a wealthy
party.

Other Taipei observers believe that the KMT might not only split, but face
financial embarrassment over huge spending for little return in the recent
poll.
-- 

Luo Wang                       |     "No one is a hero in his own nation." |
Phone: 61 03 260 841           |                                           |
       61 03 265 053           |      Sir General John Monash              |