Chen's Insider Trading Scandal
January 5, 2007 8:19am CST
My take: Since CSB is bent on destroying himself, the best advice is get out of the way, and let him do it. Sometimes, your best move is just allow status quo to run its course especially when your opponent is in self-destruct mode. Taiwan's Chen Faces Biggest Test Amid Insider-Trading Scandal June 2 (Bloomberg) -- Taiwan President Chen Shui-bian, who survived an assassin's bullet and opposition lawsuits to secure a second term, faces the biggest challenge yet to his political future -- from his own family. Chen ceded power over Cabinet appointments to Premier Su Tseng-chang two days ago, after his popularity fell to a record low amid accusations of improper share trading by his wife and son-in-law. Chen's top aide, also accused of improper stock transactions, resigned yesterday. China has labeled the president, who won re-election in 2004 by a wafer-thin 30,000 votes after being wounded by a gunman on the eve of the poll, a ``troublemaker'' seeking independence for the island it considers a renegade province. Chen's move to the sidelines may let his Democratic Progressive Party improve ties with China, Taiwan's biggest trading partner. ``Chen is facing the biggest challenge to his rule, but he isn't a lame duck yet,'' said Philip Yang, professor of political science at National Taiwan University in Taipei. ``He won't step down and won't be recalled.'' The opposition Nationalist Party and its allies have retained control of Taiwan's parliament through Chen's rule, but would need the support of the DPP to pass a motion allowing the public to vote on the president's future. Chen came to power in 2000 on a pro-independence platform, enraging mainland China. His 2004 re-election prompted protests by tens of thousands of people who accused him of faking the shooting to win sympathy votes. Chen fended off lawsuits and was cleared of involvement by an investigation 17 months later, and hasn't been accused of personal involvement in his family's share dealing. Surprising the U.S. Chen agreed on May 31 with Vice President Annette Lu, Su and DPP Chairman Yu Shyi-kun that he would no longer be involved in party operations or election campaigns. He retains his constitutional role of military commander-in-chief and in charge of foreign, defense and China policy. ``Chen is forced to delegate his powers,'' said Chen Yu-chun, a political scientist at Chinese Culture University in Taipei. ``Inside Taiwan, the probe of insider trading might extend to his wife or even him, while outside, both the U.S. and China see him a joke and refuse to deal with him.'' The U.S. refused Chen permission to make an overnight stop in the country on his way to South America last month. Chen's announcement on Feb. 27 that he was scrapping the National Unification Council, a body set up in 1990 to put together an action plan for eventual unification with China, surprised the U.S. and triggered an angry response from China. Shares Rise Chen on March 21 reiterated to the U.S. government he won't seek formal independence from China, saying ``there won't be any more surprises'' three weeks after shutting down the council. He has repeatedly said Taiwan won't move toward formal independence as long as China doesn't attack the island. China and Taiwan have been ruled separately since a civil war ended in 1949, when the Communist Party came to power on the mainland. Taiwan shares rose for a second day today following Chen's retreat. The Taiex index rose 1.2 percent this week to 6959.64, its first weekly gain in a month. ``Delegating more power to Premier Su, who is renowned for his strong execution power, is good for the market,'' said Kevin Yang, who manages the equivalent of $100 million as vice president of International Investment Trust Co. in Taipei. Su yesterday told Taiwanese businessmen in Taipei the government should be ``confident'' in its dealings with the mainland, the South China Morning Post reported today. Mainland Affairs Council Chairman Joseph Wu told the same gathering he expects to see regular cross-Strait chartered passenger flights in four to five months and more mainland tourists allowed to visit Taiwan, the report said. Unlikely to Quit Chen is unlikely to resign unless he is proved to be involved in the scandals, said Lai I-chung, director of the DPP's China Office. ``You can't ask him to step down simply because his approval rating is falling,'' said Lai. ``This isn't his personal scandal and we aren't questioning his policy.'' Vice President Lu, an advocate of independence for the island, would become president if Chen resigned. ``Many are worried if Lu becomes the president, she might declare independence, although I don't think that will happen as the U.S. simply won't allow her to do so,'' said Chen of Chinese Culture University. Calls to Resign Several opposition lawmakers led by Wu Yu-sheng on May 29 called for the general public to support a recall vote to force Chen to step down. ``Can Chen transfer his power without following the constitution?'' opposition Nationalist Party spokeswoman Cheng Li-wen said yesterday. ``He should resign.'' Chen, whose election ended more than 50 years of Nationalist Party rule in Taiwan, has been in trouble before because of his family. He was fined NT$440,000 in September 2004 for failing to declare his wife's assets. In April Chen pledged to resign if any member of his family had accepted shopping vouchers as gifts, as his wife had been accused of doing in the media. Chen's son-in-law Chao Chien-ming was detained May 25 for questioning by prosecutors investigating insider trading of Taiwan Development Corp. shares. Chao was ordered detained without visitation rights after interrogation. Opposition legislator Chiu Yi has accused Chao of buying 20 million shares of Taiwan Development shares under his mother's name after learning the stock was likely to rise. Chiu said Chao got inside information that the lender would receive NT$16.5 billion ($514 million) in loans. Chao has not publicly commented on the allegations. Chen said May 31 his decision to pass cabinet control to Su was for ``national security, the fundamentals of democracy and Taiwan's future.'' ``I'm a man with a strong mind,'' he said.