The injustice of the verdict against Chen Shui-bian

It's no surprise Ma Ying-jeou never passed the bar exam

On September 11th, 2009, Taiwan's former president Chen Shui-bian (陳水扁) was convicted and sentenced to life imprisonment. This development will certainly divert people's attention from the poor performance of current president Ma Ying-jeou (馬英九) during the Typhoon Morakot rescue effort -- a performance which brought his approval rating down to a record low of 16 percent.

But Chen's case stinks not only because Taiwan does not have a set of healthy tax regulations but also because the testimony of criminal suspect Jeffrey Koo, Jr. (辜仲諒) was used to convict Chen in exchange for dropping charges against Koo.

The fact that Ma was able to ignore the overwhelming stench of this case while his Harvard Law School mentor felt sad about it leads me to conclude that it's not surprising to learn that Ma never passed the bar exam!

Ma's former mentor Jerome Cohen is certainly not proud of his former student. This is how Cohen reacted instead:

"It is a very sad day, it is also a very important day."

And how could Cohen not be sad? He had earlier given Ma a hint about Chen's human rights, but Ma didn't pay any attention.

Now the kangaroo court is going to lay more charges on Chen, and the Chinese Nationalist Party (KMT)-dominated Legislative Yuan is proposing yet another unfair law "decriminalizing" the use of the fund by government chiefs. This change will victimize only Chen while letting suspects in many previous corruption cases go free and will make things easier for future government officials to misuse their special allowances. If the new amendment is passed, pending corruption cases against KMT party members will be conveniently dismissed.

Because it could not stand the test of fair trial (presumed innocent until proven guilty), it is unlikely that the 1,415 pages of the judgment against Chen will ever be translated into English out of the fear that the content would be challenged by law experts around the world.

However, an English version of Chen's defense is available on a non-profit educational organization's site. and links are provided under "References" below.

I hope my analysis below will provide guidance to the people of Taiwan who may know very little about how political donations are dealt with elsewhere in the world and were blindly influenced by the pan-blue media in Taiwan into believing that Chen Shui-bian is guilty as charged. After all, a person is presumed innocent until proved guilty, and Chen should be treated with no exception.

Chen's unspent donations left over from previous election campaigns
First, I would like to introduce some forms which are readily available from the Internet, and which are common knowledge to tax practitioner in North America: "information returns" and "trust returns" like the ones below.

First is this:

CONTRIBUTIONS TO A REGISTERED PARTY OR TO A REGISTERED ASSOCIATION INFORMATION RETURN [PDF file]

This is the information return (T2092) which is filed annually by a registered party or a registered association to show the total contributions received, and all the slips detailing each contributor's amount of contribution and his name and address must be kept for 2 years for possible selective inspection by a government auditor.

But this type of information return does not exist in Taiwan because the KMT does not want to disclose their secret financial dealings and its total donations received.

There's also this:

IC75-2R7 Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election

The information provided at the link above gives clear guidance to the subject discussed. Pay special attention to points 25, 26, 27, 28 (maximum deduction of $650 from tax payable so no one will benefit from a huge donation and consequently avoiding bribery), and 32 (no carry over of unused deductions to the following tax year).

In the US tax system
In the US, a political party can file an Income Tax Return for Certain Political Organizations [PDF file] (Form 1120-POL), and the rules are clear about what's exempt and what's not (investment income derived from political contributions are not exempt) see here.

There is other related tax info to be found here: "Trust income tax returns" like this form in Canada or like this one in the US.

But in Taiwan, the KMT does not want to pay taxes to the government on its investment income or business income or capital gains on sales of properties, nor do they want to return the assets to their rightful owners -- the people of Taiwan and to the now-defunct UNRRA -- so none of the aforementioned tax forms exist in Taiwan.

In other words, the KMT is like a criminal organization running some business enterprises while avoiding taxes along the way. And the transactions between the party and some key members of the party cannot be verified to be dealing at arm's length whereas the transactions between the party and the state were known to be indistinguishable during its terms in power.

In this respect, I find that the regulations in Taiwan needed serious overhaul.

In Chen's case, since no such filing requirements exist for political parties in Taiwan, it follows that the DPP wouldn't be able to file any returns similar to the ones mentioned above, nor would Chen be able to locate every last one of his supporters who donated to his election campaign and return the money to them (Which donors would get how much money back?) and ask them to donate again in future to other DPP candidates. So what could be done with the money left from Chen's election donations?

Chen couldn't report it under his personal income tax return -- nor should he have. Because the fund is for the purposes of his election or for other DPP functions, he knew that whenever there was a DPP event or whenever DPP candidates needed money for elections, he would be able to draw from these funds. In the meantime, moving the leftover donations abroad for investment was wise, and there was nothing wrong with that, otherwise he would have been subject to personal income taxes on this fund. That would have been an incorrect classification because this fund was not for his personal enjoyment. Moving money abroad did not constitute money laundering unless the prosecutors could establish that the money was obtained not from the donation leftovers but from a criminal act, e.g., money which belonged to the country.

There might have been disagreements between Chen and his wife as to how the money in this fund would be used, and perhaps his wife would have even liked to keep some (if not all) for their own family. While that would amount to selfishness, it wouldn't be a crime.

Additionally, people may have donated to Chen while not donating to other DPP candidates simply because people admired Chen so much for being a good Taiwanese role model who grew from a poor boy who almost had to drop out of school in order to work to help feed his family into a Taipei mayor with good record and, eventually, a national leader seeking reelection.

So, with the lack of Taiwan's tax regulations regarding political parties' information returns and/or tax returns, Chen couldn't be guilty on account of how the leftover donations were handled. While the KMT had all kinds of investment income and capital gains, they had never paid a cent of tax to the country -- this is tax avoidance.

The State Affairs Fund
This excerpt from "Former President Chen Shui-bian's Plea of Not Guilty Outside the Court (2)" provides some details:

The state affairs fund is similar in nature to the special allowances fund provided for administrative heads of government. The regulations governing both are loose and resemble guidelines more than strict laws. The application and reimbursement procedures of the state affairs fund have always been conducted in accordance with established practices. No one, from former President Chen and his aides to accountants in the Accounting Department of the Office of the President, has had any intention to commit crimes or corruption or to take money for their own pockets. They simply had inherited imperfect application and reimbursement procedures, which were the established practice left by the previous governments. This imperfect procedure can and should be reformed, but no one should be selectively charged with corruption simply because he or she had followed the previous governments' practice.

President Chen had, on his own initiative, cut his monthly salary by half, which means that his annual income was reduced by NT$5 million per year resulting in an NT$40 million reduction of his salary over his eight-year presidency. He had also, on his own discretion, terminated the Fongtian project and the Dangyang project, two secret National Security Bureau funds totaling NT$3.6 billion that used to be called "the President's private money." Moreover, he had donated all of his presidential election subsidies of more than NT$340 million. How then could such a president have any motive for embezzling a paltry NT$104 million from the state affairs fund? Further, in that fund, Chen has listed all fund expenses to prove that the total amount of expenditures from that fund had far exceeded the original amount allotted to it. For that reason, the accusation in the bill of indictment that "[Chen] had raised funds from other sources to pay for the expenses he listed, but he still put the state affairs fund into his private pocket" is more than absurd!

In addition to the above points, the unreliable testimony by Jeffrey Koo, Jr. -- who was cleared of any criminal charges by implicating Chen as being involved in a land deal -- also played a crucial role. However, throughout the indictment, the prosecutors assumed that Chen directed his wife (who didn't hold any public post) to act on behalf of him (who held a public post). We should all know that a person without an official post couldn't commit the crime of corruption; therefore, in order to convict Chen, the court had to assume -- without proof -- that Chen was the mastermind and that he directed his wife to commit the act of corruption.

It is widely believed that while Chen was so occupied with national affairs that he actually let his wife handle the family's financial affairs. If there's anything for Chen to regret, it would have been that he should have paid much more attention to what his wife was doing instead of being such a damn good Taiwanese nationalist leader, for it angered both China and the United States, causing him to be labeled as a troublemaker.

Chen's priority was always how to make Taiwan a normal nation, as he describes here in Block C of this interview on CNN's TalkAsia:


6:10 YouTube video: "Chen Shui-bian TalkAsia interview (01-2007) Part 3/3"
Chen Shui-bian TalkAsia Transcript

POSTED: 9:34 a.m. EST, February 2, 2007

[...]

[Q. by Anjali Rao:] President you're now in the last term of your presidency what are your priorities now?

A: As the leader of this nation, I want to make Taiwan into a normal country. Even though Taiwan is an independent, sovereign country, it is not yet a normal and complete country. Why do I say that Taiwan is not yet a normal country? Because if it were, it would be a member of the UN family and also be the member of the World Health Organization. Why do I say that Taiwan is not yet a complete country? Because our current Constitution has never been approved by our people. The 23 million people of Taiwan really need a new Taiwan constitution that is timely, relevant, and viable.

I want to put the emphasis on striking a good balance between prosperity and social justice and equity. Therefore, our main policy goals include increasing investment in Taiwan, continuing to create more job opportunities, bridging the gap between urban and rural areas, as well as decreasing the gap between the rich and poor. These are our major policy goals.

Holding Chen incommunicado without being charged, conducting a "trial by press" by leaking detrimental information to the media, and videotaping Chen's meetings with his lawyers (a practice which was declared unconstitutional by the Council of Grand Justices) had all violated Chen's right to build an effective defense. Topping it off was the unconstitutional switch of the presiding judge to Tsai Shou-hsun (蔡守訓) to take over Chen's case all pointed to the weakness of a fair trial.

The opinion from Chen's original lawyer about the unconstitutional change of the presiding judge to Tsai stated that the case should have been reverted back to the judge who was handling the case from the beginning, i.e. judge Chou Chan-chun (周占春) [Taiwan Matters translation]:

陳水扁原辯護律師鄭文龍表示，扁案從周占春合議庭被換到蔡守訓合議庭，違反法定法官原則，他認為全案違憲而且無效。

Chen Shui-bian's original lawyer Cheng Wen-lung said that since Chou Chan-chun was replaced with Tsai Shou-hsun by the procedural committee, this violates judicial principles, and he believed that this rendered the entire case unconstitutional and invalid.

陳水扁原辯護律師鄭文龍：「我們很有信心大法官應該會宣告這個案子違憲，既然是違憲的判決，當然是無效的判決，二審法院最好的方式是直接廢棄發回，再由一審重新審理，應該由當初的承審法官，周占春法官繼續審理這個案子，因為這個案子的序屬，我們認為還在周占春法官手上」

Cheng said, "We are confident that the Council of Grand Justices will declare this case unconstitutional. Since this is an unconstitutional ruling, it surely is an invalid ruling. The best way to deal with this in an appeals court (AKA "court of second instance") would be to dismiss and return the case to the first court proceeding ("court of first instance") for the original judge, Chou Chan-chun. Because of the order in which this trial has proceeded, we believe that the case is still under judge Chou's jurisdiction."

Here's what Ma's Harvard mentor, Jerome Cohen, had to say about the changing of judges:

Asked whether it was appropriate for the judge to have been changed half-way through Chen's trial, Cohen said it would have been reasonable if judge Tsai Shou-hsun (蔡守訓) had taken up and presided over the Taipei District Court's collegiate panel right from the start.

Because the judges were changed after the case had started, it was natural that there was public doubt over the matter, he said.

The chaos resulting from the recent erosion of justice in Taiwan reveals two key personnel who -- like cancer cells -- should have been removed immediately from the government's posts. A brief background check for them revealed some interesting details.

The first of these is Minister of Justice Wang Ching-feng (王清峰), who was the chairperson of the unconstitutional, pan-blue-dominated "319 Truth Commission" (319 槍擊事件真相調查特別委員會) (MORE: 1, 2, 3), a committee that tried to overturn Chen's 2004 presidential election victory by claiming that Chen staged the March 19, 2004 assassination attempt on himself in order to win sympathy votes.

Jerome Cohen's "Lesson in Integrity for All" contains a hidden message for Wang:

The case [which voided the criminal corruption conviction of former US senator Ted Stevens-R] also illustrates the importance of having a justice department chief courageous enough to repudiate his staff's misconduct, replace the offending prosecutors, initiate an investigation and drop the charges.

The second one is judge Tsai Shou-hsun, who just happens to be the judge who acquitted Ma Ying-Jeou for his involvement in his special allowance corruption case and jailed Ma's secretary, Yu Wen, instead.

Cohen's "Lesson in Integrity for All" also contains another hidden message for Tsai:

Several times during the trial, Judge Emmet Sullivan, prompted by dynamic defence counsel, reprimanded prosecutors for withholding evidence, and sought to remedy any damage to the defence.

Chen's case has caused outrage among the people in the English blogosphere. One example can be read here:

If you look at the evidence, it's actually fairly weak. One of the charges was to do with a land transaction for a science park. I don't believe testimony actually showed Chen's connection to it, just that of his wife. But, with almost all the charges, the prosecutor said "how could Chen not know". I'm not sure how why husbands are responsible for the crimes of their wives.

What Chen was guilty of was taking advantage of a big hole in Taiwanese law that allows politicians to deal with surplus campaign funds as they see fit. There were proposals to close this during Chen's presidencies, but the KMT-controlled legislature strangely cut them all down. So I'm not sure how that's a crime either, least of all money-laundering. To launder money it has to be obtained illegally, from criminal proceeds, etc. If the law doesn't say Chen wasn't entitled to keep it, moving it around can't possibly be money-laundering.

Here's another example by Jerome F. Keating Ph.D.: "The Real Source of Taiwan's Campaign Corruption," Tuesday September 15, 2009.

People say that Ma is keeping Chen in prison because Ma cannot continue to deceive the people of Taiwan without Chen being around to divert attention; in case you haven't noticed, the Mandarin word for "cheat" or "deceive" is piàn​ (騙), which is formed by combining two characters. Ironically, the left half is Ma's surname, which means "horse" (馬), and the right half is the latter half of the former president's given name: Bian (扁). Ma wishes to keep A-bian behind bars so A-bian's case can help Ma to continue deceiving the nation by drawing away attention from his poor performance.

Taiwanese people who divide themselves among pro-Chen or anti-Chen camps should view the whole situation from a broader scope. Since the Ma administration came into power in 2008, justice and rule of law in Taiwan are swiftly being eroded. Something has to be done quickly to stop this.

The KMT is not just a simple political party -- it is a criminal organization engaged in tax avoidance economic activities, and has never paid a cent of tax to the country on its investment and other business or capital gains income. They have illegally sold properties and assets misappropriated from the Taiwanese people and of international aid to private owners.

If the heavy fines imposed on the accused in Chen's case are paid, they will eventually wind up in the combined KMT government's coffers to assist the party in its subsequent criminal activities, e.g. tax avoidance economic activities and vote-buying schemes, resulting in a vicious cycle.

As Chen Shui-bian pointed out in the TalkAsia interview, the people of Taiwan have never approved the ROC constitution which has been used to govern Formosa since the arrival of the KMT per General Order no. 1. They never had a chance to conduct a fair election independent from the ROC constitution and were consequently deprived of the chance to have a normal functional legislative body to pass fair laws.

Taiwanese abroad should hold a demonstration in front of the UN, and the people of Taiwan should protest in front of the American Institute in Taiwan (AIT) to demand the confiscation of all the assets of the KMT criminal organization and evict that party from Taiwan. It is a Chinese party which should not participate in Taiwanese elections. Since there is no longer any hostility between the two Chinese parties (the KMT, and the CCP), the KMT's ROC government should terminate its exile status and return to its origins -- namely, any territory in China -- and let the de facto independent Taiwan become a normal nation.

References:
The English version of Chen's defense, in five parts:
http://www.wretch.cc/blog/ketagalan/12878262
http://www.wretch.cc/blog/ketagalan/12878271
http://www.wretch.cc/blog/ketagalan/12878272
http://www.wretch.cc/blog/ketagalan/12878274
http://www.wretch.cc/blog/ketagalan/12878276

Earlier on my personal blog:
* Tracking Taiwan's evaporating national assets - Ma is a suspected criminal on the loose

Previously on this blog:
* Tuesday, December 16, 2008, Taiwan Echo and Tim Maddog: "Seeing Chen Shui-bian's so-called "money laundering" case from another angle"

* Tuesday, August 14, 2007, Tim Maddog: "Ma Ying-jeou acquittal documentation online"

* Saturday, November 18, 2006, Tim Maddog: "The differences between the cases of Ma Ying-jeou and Chen Shui-bian"

The erosion of justice in Taiwan:
This has been a long-running series. Here, in chronological order, is a list of some recent letters on the subject and news about related events:

* November 6, 2008: Scholars and writers from around the world publish an "Open letter on erosion of justice in Taiwan." The same letter as an online petition has been signed by more than 2,000 people.

* November 25, 2008: Minister of Justice Wang Ching-feng (王清峰) calls the open letter "inaccurate."

* December 2, 2008: "Eroding justice: Open letter No. 2" counters Wang Ching-feng's claims.

* January 8, 2009: Over a month later, Wang Ching-feng comes up with "clarif[ications]" regarding the open-letter writers' so-called "misunderstandings."

* January 21, 2009: "Eroding justice: Open letter No. 3" is addressed to President Ma Ying-jeou.

* January 24, 2009: Two more "US-based Taiwan experts add [their] names to open letter [No. 3]."

* January 25, 2009: President Ma claims the public had gained confidence in the judiciary in 2008 -- the exact opposite of what this Taiwan News article tells us they actually felt:

According to recent surveys conducted by Academia Sinica and the Web site Yahoo! Kimo, over 50 percent of the people do not believe in Taiwan's judicial system and over 75 percent have no confidence that the Judicial Yuan will undertake judicial reform [...]

* May 22, 2009: An estimable group of scholars and writers -- 26 in all, and each one with a deep understanding of Taiwan and the surrounding facts -- has composed an open letter addressed directly to President Ma Ying-jeou (馬英九). The letter addresses the ever-increasing problems with judicial fairness, press freedom, the lack of transparency in the Chinese Nationalist Party's (KMT) rapprochement with China, the loss of Taiwan's sovereignty, and the loss of human rights. The argument the letter makes is rock solid. It is based on demonstrable facts.

* September 11, 2009: Chen Shui-bian gets life

* September 12, 2009: "Jerome Cohen, Ma's Law School Mentor, Again Speaks Out on the Ma Government Violation of Human Rights," by Jerome F. Keating Ph.D.

(Tim Maddog contributed to this post.)