‘Where’s the money?’ In Taiwan, a corruption scandal rocks its political landscape

Foreign Affairs

Political fortunes change fast in Taiwan. The New Power Party (NPP), the third largest political party in Taiwan — an ally of the majority Democratic Progressive Party (DPP) — is in crisis after being rocked by a corruption scandal.

Hsu Yung-ming of the New Power Party
Hsu Yung-ming of the New Power Party, perceived as desperate to receive his bribe money, asking, "Where's the money?"

2020 had been a great year for Taiwan’s Democratic Progressive Party (DPP). In January, DPP’s Tsai Ing-wen not only won presidential re-election by defeating her opponent from the Nationalist Party (the Kuomintang/KMT) but also managed to do so with the highest vote on record, gaining 8.17 million votes. The DPP retained the majority in the legislature as well. Taiwan weathered the COVID-19 pandemic impressively, receiving praise internationally for its ability to limit the number of cases to below 500 until even today. Amid drastically deteriorating Sino-U.S. relations, Taiwan’s tie with the U.S. seems to be at its strongest since the latter terminated diplomatic relationship with the Republic of China in 1979. Indeed, U.S. Health and Human Services Secretary Alex Azar just visited Taiwan, the highest Cabinet-level official to do so since 1979, and the U.S. has concluded several noteworthy arms sales with Taiwan this year, the latest being four SeaGuardian surveillance drones.

But while riding this high, a high-profile corruption scandal has severely damaged the image of the DPP and its major ally, the New Power Party (NPP).

On July 31, more than 200 members of the Taipei District Prosecutor’s Office searched the legislature building and seized more than 9 million Taiwanese dollars (about USD$310,000) in cash that is believed to be connected to a corruption investigation. Subsequently, prosecutors detained six current and former legislators, an unprecedented development in Taiwan’s political history. They include Su Chen-ching, a DPP legislator and the nephew of the Presidential Secretary General and former president of the legislature Su Jia-chyuan; former legislator and the current president of the NPP Hsu Yung-ming; two KMT legislators; one former DPP legislator; and another legislator with no party affiliation.

These legislators were involved in a bribery case concerning a convoluted struggle over the ownership of a department store conglomerate named Pacific SOGO Department Stores Co., Ltd. In short, the disgruntled former Chairman of the Board of SOGO, Li Heng-lung, bribed these legislators starting from 2013 to make a 2017 revision of the Company Act retroactive so that he could take back SOGO’s ownership. According to Li, the company was robbed from him through a forgery of corporate documents by his rivals. To Li’s dismay, the legislature did not grant his wishes, but his bribery triggered a years-long investigation by prosecutors that culminated in high-profile detentions.

The investigation sent a shockwave through Taiwanese politics, not just because the sum involved — more than NT$37 million (about $1.3 million) — is among the highest in the history of the legislature. Those who are implicated span the political spectrum. When it comes to corruption in Taiwanese politics, it seems that the vast ideological and political differences among the various parties make no difference.

On a deeper level, the case has been particularly damaging to the DPP and the NPP. The suspects who have received the most attention are Su Chen-ching and Hsu Yung-ming. The former accepted NT$20 million, the largest sum in this case and dwarfing the second-highest amount of NT$9 million received by one of the two KMT legislators. In addition, just weeks ago, a leaked Taiwanese Ministry of Foreign Affairs memo complained that Su and his uncle secretly led a delegation of state-owned enterprises to Indonesia in 2017 through the arrangement of a notable manpower company without notifying the local Taiwanese representatives. Critics charged the two of pursuing personal interests by bypassing the official channel, a charge that they denied. For Hsu’s part, he received “only” NT$2 million, but was widely mocked for his and his party’s harsh stance against corruption in the past. In one recorded phone call, Hsu apparently directly asked, “Where’s the money?”

The case also makes a mockery out of the DPP and the NPP’s founding principles. Although two KMT legislators were implicated as well, the KMT has never really shaken off its image as a controlling but corrupt party from before Taiwan’s democratization, and it never adopted anti-corruption as its central political identity. On the contrary, a core DPP slogan has been “integrity, diligence, and love for the homeland,” while the NPP grew out of the 2014 Sunflower Movement, a large-scale protest with many young students participating to oppose the then-KMT government’s signing of the Cross-Strait Service Trade Agreement that signifies closer economic relations with mainland China. Since then, the NPP has labeled itself as a party with high morality that, while ideologically aligned with the DPP, serves as a check on the two more established powers’ unethical and secretive practices. They have attracted many young followers in the process.

The embarrassment that the case has inflicted upon both parties’ leaderships is palpable. Not long before the scandal unraveled, Tsai reassured the public that her party’s absolute majority would not lead to more corruption, and defended Su Jia-chyuan and his nephew on the Indonesian affair. Tsai also personally participated in Su Chen-ching’s campaign rallies when the latter was running for legislator. After the scandal erupted, Tsai admitted that the DPP once again faces a legitimacy crisis — its former president Chen Shui-bian was arrested for corruption in 2008 — and that it is uncertain her party will retain control of Taiwan in 2024. Tsai further warned that those who aim for personal enrichment should not join the DPP. Su Jia-chyuan, Tsai’s confidant and widely believed to be a top candidate for chief officer of the executive branch if the DPP were to stay in power in 2024, resigned from his post as Secretary General so that prosecutors can conduct unhindered investigations.

The blow to the NPP is even more devastating. Hsu has voluntarily resigned from the presidency of the party, but apparently that was insufficient to convince party members not to rescind their memberships. NPP’s only two legislators in Taipei’s municipal parliament quit the party, while the second-highest party member said he would not seek to become the NPP president. In short, the third-largest political party in Taiwan is on the verge of collapsing.

Granted, it would be an overstatement to conclude that this is the beginning of the end for the DPP’s dominance and the NPP itself in Taiwanese politics. In fact, the DPP dodged a bullet given that the prosecutors acted now instead of before the 2020 election, despite having monitored relevant phone calls for at least three years. So far, none of the legislators have been officially charged, and the entire legal process could take years. Both Su and Hsu have denied wrongdoing, with the former claiming that the NT$20 million he received was a loan from Li to pay back his gambling debt, and the latter stating that the money was for paying NPP salaries. It is too early to tell what exactly will happen to the legislators in court.

Nevertheless, the scandal represents a serious breach of trust. It also demonstrates just how quickly political fortunes can change in Taiwan. The DPP’s dominance was seen as almost invincible just a few weeks ago, but the upcoming 2022 local election might witness the decline of the DPP and even the potential disappearance of the NPP. For that not to happen, Tsai has an urgent task to prove that the dominance of her party will not lead to more corruption; this will require concrete action, as opposed to just rhetoric.