Week of April 2-8, 2016

Initial reports about the Panama Papers find no evidence of Taiwanese politicians’ involvement in the scandal; incoming premier Lin Chuan announces deputy, health and welfare minister and cabinet spokesperson; the DPP unveils draft cross-strait pact oversight bill without controversial clause; president-elect Tsai reiterates commitment to cross-strait exchanges and communication for peaceful development of ties with China; former KMT secretary general suggests axing annual KMT-CCP Forum. Welcome to this week’s edition of the Insider.



NO POLITICIANS LISTED: No Taiwanese politicians were among the 90 Taiwanese passport holders related to the 2,725 offshore companies with connections to Taiwan and listed on the leaked documents from Panamanian law firm Mossack Fonseca, which has been helping rich and powerful clients hide their assets to avoid sanctions and evade tax, according to an initial report by the Chinese-language CommonWealth magazine on Wednesday. Invited by the International Consortium of Investigative Journalists (ICIJ) to go through the documents, the magazine said it is wrapping up its analysis on the files related to Taiwan and will publish the final report soon, adding that a number of local media outlets have mistakenly quoted a previous report it collaborated with the ICIJ in alleging that 16,000 Taiwanese individuals or companies were listed on the “Panama Papers.”

TSAI FAMILY: An offshore company set up by incoming president Tsai Ing-wen’s (蔡英文) brother Tsai Ing-yang (蔡瀛陽) in 2008 came under spotlight following the Chinese-language Apple Daily’s Wednesday report that it was listed as a client of Panamanian law firm Mossack Fonseca. The offshore company was established solely for buying financial products, Tsai Ing-yang’s lawyer Lien Yuan-long (連元龍) said on Tuesday, adding that the information was disclosed in a prior report by the CommonWealth Magazine in collaboration with ICIJ and has nothing to do with the “Panama Papers.” KMT lawmakers on Wednesday cast doubt on Lien’s statement and called Tsai to make public all the investments made by her family.

REQUEST FOR DOCUMENTS DENIED: The Ministry of Finance said on Wednesday it will launch a special task force for cooperation with the ICIJ to decode documents and investigate tax code violation by Taiwanese individuals and companies implicated by the Panama Papers. However, CommonWealth magazine, the ICIJ’s only Taiwanese partner, rejected a request by the ministry for access to related documents on account of its confidentiality agreement with the ICIJ not to forward the data to the government.

TACKLING TAX EVASION: The DPP and the New Power Party respectively proposed on Wednesday to amend the Income Tax Act (所得稅法) to curb tax evasions in the wake of the “Panama Papers” revelations, with accusations that the KMT blocked such amendments in 2012.



PACT OVERSIGHT BILL: The DPP caucus last Friday unveiled its draft bill on monitoring cross-strait negotiations and agreements, which allows the legislature intervene before, during and after a negotiation and the signing of a deal. A controversial clause that came under fire for letting an agreement automatically come into effect when the review process comes to a standstill was not included in the draft. The bill proposes that terms or agreements in question be put forward for an up-or-down vote in the legislature should lawmakers fail to conclude the review within deadlines, although some critics said this mechanism is of little difference from that of the disputed “automatic enactment.” China’s Xinhua News Agency described the bill as “lacking goodwill.”

CROSS-STRAIT PEACE: President-elect Tsai Ing-wen on Wednesday said that her administration would strengthen exchanges and communication with China while committing itself to maintaining peaceful and stable relations. Tsai reiterated her stance during a meeting with former US deputy secretary of state Richard Armitage, who said Tsai is “more than capable of handling cross-strait relations.” The DPP said on Saturday that it has taken note of U.S. National Security Council Senior Director for Asian Affairs Dan Kritenbrink’s remarks encouraging Taipei and Beijing to continue their efforts to maintain peace and stability.

KMT-CCP FORUM: Former Chinese Nationalist Party (KMT) secretary-general Lee Shu-chuan (李四川) suggested the party to call off the party’s annual forum with the Chinese Communist Party (CCP) in a party reform proposal he submitted to newly sworn-in KMT Chairperson Hung Hsiu-chu (洪秀柱) before his term ended last month, local media reported on Sunday. Other KMT members, including former KMT vice chairman Hau Lung-bin (郝龍斌), expressed their disapproval of the recommendation of cancelling the forum, which was initiated in 2005 by then-KMT chairman Lien Chan (連戰). Responding to the issue, Hung asserted Wednesday that the forum “must not be abrogated.”

JUSTICE MINISTER’S CHINA TRIP: Minister of Justice Lo Ying-shay (羅瑩雪) said addressing issues with regard to the Cross-Strait Joint Crime-Fighting and Judicial Mutual Assistance Agreement (海峽兩岸共同打擊犯罪及司法互助協議) was the purpose of her five-day trip to Shanghai and Beijing, on returning to Taipei late last Friday. Controversy over Luo’s visit emerged as she is now a cabinet member of a caretaker government.



NEW GOVERNMENT APPOINTMENTS: Premier-designate Lin Chuan (林全) announced on Thursday that said Lin Hsi-yao (林錫耀), a former minister without portfolio, will be his deputy. Former vice health minister Lin Tsou-yen (林奏延) was appointed as the new cabinet’s minister of health and welfare with a plan to attend this year’s annual meeting of the World Health Assembly by the end of next month. Tung Chen-yuan (童振源), an international affairs expert and professor at National Chengchi University, will become cabinet spokesman, Lin Chuan said.

OBI CONTROVERSY AND ACADEMIA SINICA: President-elect Tsai said on Wednesday that the decision to resign by Academia Sinica president Wong Chi-huey (翁啟惠), who has been embroiled in controversies ensuing the OBI Pharma Inc’s (台灣浩鼎) alleged insider trading, should be respected. Wong’s entanglement in the matter has impacted the top institute’s reputation, elaborated Tsai, while urging Wong to return to Taiwan to make clarification of the matter. Wong, whose term is set to expire in October, has offered resignation twice to President Ma Ying-jeou (馬英九) last week while extending his stay in the U.S. citing health concerns.

Ma is inclined to picking City University of Hong Kong President Way Kuo (郭位), an allegedly China-leaning academic and his old friend, to fill the vacancy left by Wong, the Chinese-language Next Magazine reported. The story ignited debate on whether the decision on the new Academia Sinica head should be left to Tsai Ing-wen’s discretion instead.

Meanwhile, Presidential advisor Yang Shih-chien (楊世緘) was reportedly the sixth largest OBI Pharma shareholder, according to the magazine. The Prosecutor’s Office later dismissed the allegation.

The magazine also reported that Wong, who admitted helping his daughter sell 10,000 of her OBI Pharma shares one day before the company learned about the unfavorable trial result of a breast cancer drug, had forehand knowledge about the result prior to the transaction. The Prosecutor’s Office played down the report and did not directly addressing its authenticity on Wednesday, referring to the confidentiality requirements during investigation.

PASSPORT STICKER BAN: The legislature’s Foreign Affairs and National Defense Committee on Wednesday approved a proposal to remove a controversial addendum to the Enforcement Rules of the Passport Act (護照條例施行細則) that bans any modifications to the nation’s passports, which has been criticized as targeting the action by advocates for Taiwan independence to cover the “Republic of China” seal on their passport cover with a “Republic of Taiwan” sticker.

KMT ASSETS: Describing the KMT’s controversial assets as a constant source of criticism and a subject exploited by opponents that led to its landslide defeat in the Jan. 16 elections, former KMT secretary-general Lee Shu-chuan recommended the party to hold on to its legal assets in a report to new Chairwoman Hung Hsiu-chu, adding that it should donate all of its illegitimate properties and give away election subsidies to charity organizations to win public support, local media said.

TAIPEI MAYOR: DPP Legislator Pasuya Yao (姚文智) said he was ready to run for Taipei mayor, amid concerns that incumbent Mayor Ko Wen-je’s (柯文哲) approval rating has fallen to 42.3 percent from 70 percent after one-and-a-half year in office. Despite denying reports that he would launch a political group, which could develop into a political party to attract independent supporters Tsai’s inauguration, Ko admitted his intention to do so “in the future.”

CAPITAL PUNISHMENT: Minister of Justice Luo Ying-shay on Wednesday downplayed speculation that executions could take place before the Ma administration steps down in May, saying there is no specific schedule set for any upcoming executions. Luo made the remark amid calls for harsher punishment and retention of death penalty in the wake of a recent decapitation of a four-year-old girl. Abolition advocates have expressed grave concern over the Ma administration’s “repeated attempts to appease public discontent with its performance with executions.” The ministry has been persistent with its stance on “following the opinions of the majority” rather than “recklessly abolishing the death penalty with amendments of law,” Luo said.

URANIUM POLICY: US Deputy National Security Adviser Ben Rhodes last Thursday praised Taiwan’s enriched uranium policies, describing Taiwan’s cooperation as “sending an important message to Asia about the benefits of nuclear security.” The remarks were made as more than 50 national leaders met in Washington for a two-day summit aimed at halting nuclear proliferation, although Taiwan was not invited to the event.

US-TAIWAN TRAVEL PROGRAM: The U.S. and Taiwan on Monday agreed to cooperate on a new program aimed at expediting travel between the two countries, allowing pre-approved frequent travelers a quick route through customs and immigration.



HON HAI, SHARP SIGN DEAL: Hon Hai Precision Industry Co (鴻海精密) chairman Terry Gou (郭台銘) and Sharp Corp president Kozo Takahashi formally signed a merger deal in Japan on Saturday, ending a four-year takeover drama filled with difficult negotiations. Marking the first foreign acquisition of a major Japanese electronics maker, the deal is expected to grant Hon Hai access to a greater share of the global smartphone supply chain.



OVERSTAYING CHINESE: The intentions of Chinese who go missing after entering Taiwan on the pretext of traveling or undergoing medical procedures are suspicious, former Taiwan Solidarity Union legislator Hsu Chung-hsin (許忠信) has said, pointing to concerns that they could be engaged in intelligence-gathering. The probability of this has surged since the Ma administration further opened Taiwan to China, Hsu said.

SUBMARINE PROGRAM: The military has proposed a NT$400 million (US$12.35 million) program to upgrade the nation’s two aging Dutch-made Zwaardvis-class submarines. The two-year “life extension program” that is to run from this month, will be supervised by the National Chungshan Institute of Science and Technology (NCSIST), which will invite tender offers from foreign defense companies with the technical expertise to integrate weapons and operational systems into the submarines, the Chinese-language Liberty Times reported. The U.S. will provide technical assistance for the program, according to Mark Stokes, Project 2049 Institute executive director and a former Pentagon official.


The Taiwan Insider is a weekly feature prepared by the Thinking Taiwan Foundation’s Chris Wang, Serena Chuang and staff members. Comments? Leads? You can reach us at editor@thinking-taiwan.com. Click here to subscribe to the Insider and receive it in your e-mail.


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