INTERVIEW: Party assets committee learns from Germany

Back from a research trip to Berlin, Ill-gotten Party Assets Settlement Committee Chairman Lin Feng-jeng spoke about applying Germany’s experience with transitional justice to Taiwan in an interview with ‘Liberty Times’ (sister newspaper of the ‘Taipei Times’) staff reporter Chen Yu-fu

Liberty Times: What elements of Germany’s post-unification experience with the handling of illicit assets held by the [Socialist Unity Party (SED), the ruling political party of the German Democratic Republic, also known as East Germany] do you think are relevant to the committee?

Lin Feng-jeng (林峯正): The German Federal Republic’s repossession of assets illicitly obtained by the SED has two components. First, there was a committee tasked with investigating party assets, which operated from 1990 to 2006. Second, there was the Trust Agency. As soon as inquiries began, the party’s assets were transferred to the agency and frozen.

The committee and the agency together employed a staff of 120. The Trust Agency still exists today and has three employees, who are tasked with processing the remaining party assets and lawsuits.

Since the creation of the assets committee in Taiwan, the subject of its investigations, the Chinese Nationalist Party (KMT), has repeatedly said that it is unconstitutional. I found that in Germany, the SED also started many lawsuits.

However, the German committee won all of the constitutional cases started against it. Legal scholars believed that investigating party assets was beneficial to the public and there was strong societal consensus in favor of doing so. Very few academics disagreed.

The German method of investigating party assets is broadly similar to Taiwan’s. For the most part, it was carried out by looking into real-estate ownership and parsing archived documents.

The SED controlled more than 400 state-owned enterprises, the majority of which were used by party elites for money-laundering. These were not profitable or productive enterprises and they had few employees.

After the Trust Agency froze their assets, the enterprises had to apply for the agency’s permission for any expenses exceeding 5 German marks. The Taiwanese committee’s methods are consistent with German practice.

The SED-controlled enterprises were completely liquidated and the proceeds went to state coffers. Different types of party assets were disposed of by different means. A lot of that experience is valuable for Taiwan.

Litigation regarding the KMT-controlled Central Investment Co (中央投資公司) and Hsinyutai Co (欣裕台) is ongoing. We need to determine whether it is better to nationalize the companies’ stock or sell off the low performers.

LT: How does the German and Taiwanese committees’ legal authority differ?

Lin: The German committee was more empowered than the Taiwanese counterpart. It was allowed to transfer all party assets to the Trust Agency and nationalize their ownership. Any asset without a known legal provenance independent from the SED was nationalized. The burden of proof was on the SED to show that each asset was obtained legally.

Taiwan’s assets committee is authorized only to freeze assets, not repossess them, like the German committee. In addition, the German committee was empowered to search and impound to a considerable extent. These powers led to challenges at the German Federal Constitutional Court, but the committee prevailed in each and every instance.

Our committee does not have the power to search or to impound; we only have the authority to demand information and levy fines when met with non-compliance. We had no resort after the destruction of documents by the National Women’s League (NWL) other than filing a criminal complaint with the courts.

Had we had the authority to search or impound, we would have found plenty of documents by going in directly. Yet the KMT still said that we violated the laws and the Constitution. There were no such problems in Germany.

As the Taiwanese legal system was inspired by German law, it is highly unlikely that the KMT’s accusations have substance.

LT: How did Germany handle the problem of affiliated organizations? The China Youth Corps has claimed that it is not an affiliate of the KMT, but said that it used to be a government agency. How should this be handled?

Lin: The KMT would not have fewer affiliates than the SED. The youth and women’s organizations of the SED were returned to state ownership without exception.

Germany began to handle the heritage of East Germany as soon as it collapsed. After 30 years, the affiliate organizations in Taiwan are slowly transitioning and being diluted.

The corps is constantly defending itself, but many things cannot be explained and are either funny or contradictory.

After the assets committee said it suspected that the corps is a KMT affiliate, the corps strategically said that it is a government agency. If it is a government agency, then what is there left to say? If it is a government agency, then who is the decisionmaker? Where does the power of a minority of people at corps’ headquarters come from?

It comes from former president Chiang Ching-kuo (蔣經國). Former corps president Jeanne Li (李鍾桂) was appointed by Chiang.

They are unable to explain who invested money into the corps’ assets and where the power comes from. I suspect that the NT$5 million (US$167,426 at the current exchange rate) they recorded back then was also arbitrarily written in order to register their social group. How could there only be NT$5 million? The CYC’s money is the country’s money.

There are two sides to the story. At times, the corps has acted as if it is part of the government and at times, it has acted as if it is part of the party. When the country requested to manage it, it cooperated and completed registration. However, that sum is very far from reality. The government back then neglected to investigate it and now the situation is unclear.

The corps is the same group of people constantly replicating different subsidiary companies. This is the result of not distinguishing between the party and the state for a long time. The assets committee is applying the standards of countries that adhere to the rule of law to clean up the mess.

We respect any way in which the corps wants to defend itself, but unreasonable and illegal matters must eventually be resolved. Transitional justice requires time. Handling party assets is a highly controversial job, and conflicts and noise are inevitable. The question is whether the committee is confident and determined enough to solve the problem, and benefit the country and society.

LT: A hundred-and-seventy boxes of women’s league documents were destroyed. Has that made it more difficult to uncover the truth about its income from the so-called Military Benefit Tax and the return to state ownership of the league’s assets?

Lin: The assets committee is currently looking for information on the league’s use of the military welfare tax through other channels and has already found some evidence.

The league has held off the committee’s requests for information. Last year, as we negotiated an administrative contract with the league, it said that it did not have any documents. It has by now become clear that it did have information.

If negotiations had not been held with the league in June last year, and the committee had directly branded the league as a KMT affiliate and filed a lawsuit, we would have run a huge risk without any documents on our hands, but after more than half a year of complications, the committee has finally received internal documents and found some answers to cash flow questions.

During a court session on May 3, the committee told the judge that if the KMT hosted the meetings to discuss the distribution of Military Benefit Tax proceeds 74 consecutive times, then the league is a KMT affiliate. This structure is unquestionable.

As to the league’s claim that Military Welfare Tax consisted of donations that were made freely and willingly — what kind of nonsense is that? You only have to ask members of the Importers and Exporters Association of Taipei from back then to know that not donating equaled not paying taxes. There was nothing you could do. How could that be considered willing donation?

Right now, the committee has not set any conditions for organizations beyond the league. The committee will start from early documents. In the end, the key still lies in the evidence.

Take the Cheng Hsin General Hospital established by Chiang Kai-shek’s (蔣介石) wife Soong Mayling (蔣宋美齡), for example. The committee needs to look at the nature of the hospital and to whom the assets belong, and determine whether it meets the qualifications of a charitable organization before discussing how to handle it.

In clarifying the ownership of the hospital, the only fear is that public property could turn into private property, which would be unacceptable to society.

The committee also encourages people who contributed money to the league or corps to formally present their evidence. If they can prove that they contributed money, the committee is to return their rightful assets.

If the league or corps are unable to prove that they legally obtained its assets, they will be returned to state ownership. If the assets are found to be private property, there is no reason to confiscate them, but the truth is that a large amount of public property became private property.

Translated by staff writers Jonathan Chin and Sherry Hsiao