KMT Assets a Barrier to Party Reform and Electoral Success

This year marks the 74^th anniversary of the 228 Incident, which occurred during a dark chapter in Taiwan’s authoritarian past. The anniversary commemoration was filled with praise by Kuomintang (KMT, 中國國民黨) politicians for how far their party has come since the island’s democratization. However, the issue of the party’s substantial, and ill-gotten financial and property assets continues to plague the KMT and hinders the ongoing transitional justice process. The Democratic Progressive Party (DPP, 民主進步黨) has argued that these assets undermine the country’s democracy by creating an unfair electoral environment. Indeed, with the creation of the Ill-Gotten Party Assets Settlement Committee (CIPAS, 不當黨產處理委員會) in 2016 and the committee’s subsequent rulings, the KMT is fighting a losing battle to hold onto these assets. Moreover, these assets may be hurting the KMT’s electoral prospects and their ability to remain a competitive party—especially when calls for KMT reform are at their highest. The KMT should consider embracing CIPAS’ rulings and finally resolve the ill-gotten assets issue.

Historical Legacy of the KMT’s Party Assets

The years after World War II saw a period of authoritarian KMT rule in Taiwan known as the “White Terror” (白色恐怖). Upon its retreat to Taiwan in 1949, the KMT instituted martial law, making it illegal for anyone to defy the KMT government. The “White Terror” period saw tens of thousands of people reportedly arrested, and at least 1,200 executed between 1949 and 1992. During this era, the KMT began stockpiling both property and financial assets. Shortly after its arrival in Taiwan, the party occupied buildings previously owned by the Japanese, forced businesses in Taiwan to provide “donations” to the KMT, and handed out plots of land and funds to politically connected groups who would start businesses. Crucially, the KMT retained all profits derived from these assets.

After the lifting of martial law in 1987, authoritarian rule in Taiwan effectively ended. However, Taiwan’s transition to democracy did not diminish the KMT’s party assets. In fact, the KMT has continued to profit from these ill-acquired assets. By 2016, the KMT held over USD $640 million in assets, making it Taiwan’s wealthiest political party by a sizable margin. The DPP, by contrast, possessed assets valued under USD $25 million, which were acquired primarily through direct donations. The inequality in party financing and the historical legacy of the KMT’s acquisition of these assets led the DPP-controlled Legislative Yuan to pass legislation to address this inequality and promote social reconciliation. In 2016, the Legislative Yuan passed “The Act Governing the Settlement of Ill-Gotten Properties by Political Parties and Their Affiliate Organizations” (政黨及其附隨組織不當取得財產處理條例). This act created the Ill-Gotten Party Assets Settlement Committee, which was granted power to “conduct the investigation, restitution, forfeiture of restoration of rights of ill-gotten assets acquired by the political parties, their affiliated organizations, and trustees.”

CIPAS Findings and KMT Reactions

The CIPAS committee’s database has identified nearly 7,400 properties connected to the KMT since 2016. In March 2018, the Taiwan’s National Women’s League (婦聯會)—founded by Soong Mei-ling (宋美齡), wife of Chiang Kai-shek (蔣中正)—was pressed to relinquish all of its assets due to its historical and continued ownership by the KMT. The organization is said to own assets worth USD $1.3 billion worldwide. Subsequently, Central Motion Picture Co. (中央電影事業股份有限公司), which had long been suspected of being wholly owned by the KMT, had its assets frozen in September 2018. Additionally, in September 2019, CIPAS determined that the Broadcasting Corporation of China (BCC, 中國廣播公司), a radio station, was an affiliate of the KMT and demanded the transfer of over USD $273 million in assets to the central government.

The KMT has not willingly accepted the outcomes of these and many other cases involving its party assets. At nearly every turn, KMT members have fought back against what they perceive as politically motivated attacks on their party. In fact, former KMT Chairwoman Hung Hsiu-chu (洪秀柱) called the transitional justice process a “witch hunt.” In addition, the KMT has denounced the CIPAS after every committee announcement regarding the assets issue. The KMT has also pushed the narrative that the DPP is leveraging the CIPAS to conduct a “Green Terror,” likening this process to the authoritarian practices of the “White Terror.” Furthermore, the KMT has launched court cases to block the transfer of these party assets and has even gone so far as to challenge the constitutionality of the Act and the CIPAS. However, the Taipei High Administrative Court’s (臺北高等行政法院) May 2020 ruling found the Act to be constitutional, causing KMT Chairman Johnny Chiang (江啟臣) to denounce the ruling once again, reiterating the argument that the DPP is “doing things that are unconstitutional.”

The Need for Reform

The KMT’s persistent efforts to lambast the DPP and CIPAS as politically motivated clearly did not mobilize voters in 2020. Recent editorials in Taiwan have expressed frustration with the KMT’s inability to resolve the assets issue. Many more have linked solving the asset issue to the broader need for KMT reforms. A 2016 editorial in the blue-leaning United Daily News called the KMT’s party assets “enormous political baggage,” which hinder KMT candidates’ chances at being elected. In an interview for The News Lens International, former KMT spokesperson Eric Huang (黃裕鈞) agreed that in terms of public perception, “[the assets issue] doesn’t look good for us.”

Ultimately, the next two years will be crucial for the KMT’s future. The party will be holding its chairmanship elections in July 2021, with various potential candidates already positioning themselves for the voters. In March 2020, the party elected Johnny Chiang as chairman following KMT presidential candidate Han Kuo-yu’s (韓國瑜) loss to Tsai Ing-wen (蔡英文) in the 2020 presidential election. Chiang came into the position hoping to change the KMT into a younger, united, reformed, and ultimately electable party. As of yet, however, those wishing to see the party change have been disappointed. At the annual KMT National Congress in 2020, the party decided to continue its embrace of the so-called “1992 Consensus” (九二共識) and voted not to drop the word “Chinese” from the party’s name, dashing the hopes of reformers. Chiang’s failure to bring about meaningful reforms within the KMT will likely undermine his suitability for office in the eyes of more reform-minded members. If Chiang wants to hold on to the chairmanship in 2021, he will need to implement greater changes in the KMT in order to appease these members.

Beyond the KMT chairmanship election scheduled for July 2021, Taiwan will also hold its local nine-in-one elections the following year. These elections determine the local leaders in Taiwan’s cities and generally serve as referendums on the governing party’s policies. As of March 2020, popular support for the KMT stood at 12.5 percent, suggesting that the party is on the ropes. Aware of the party’s low general support and inability to win votes from younger, reform-minded citizens more broadly, the KMT wrote on Facebook that this was the party’s “darkest hour.” The KMT’s failure to implement reforms could significantly impact its chances in the 2022 elections, especially as these reforms have a central place in the KMT’s own political rhetoric.

Recommendations

Although the need for reform is urgent, there are numerous changes that the KMT can make to resolve the assets issue and improve its electoral chances.

• First, the KMT should accept the Taipei High Administrative Court’s ruling that the CIPAS’ actions are constitutional. Disputing the constitutionality of the court’s decision undermines the transitional justice process as well as the legitimacy of the High Administrative Court. The KMT should embrace the process for all other findings by the CIPAS. By willfully accepting the judgments of the CIPAS, the KMT and Johnny Chiang could signal to voters that the party is embracing reform.
• Second, the KMT should encourage any organization with which it has ties to cooperate fully with the CIPAS. By proactively disclosing its ties to these groups and urging them to comply with the CIPAS’ rulings, the KMT can demonstrate its desire to settle this issue substantively.
• Finally, the KMT should drop its usage of the term “Green Terror” to describe this process. In his report on transitional justice in Taiwan, Thomas Shattuck explains that while this term can certainly mobilize some fringe voters, equating the CIPAS to the “White Terror” shows how “the KMT at a fundamental level still does not comprehend the damage it caused to Taiwan’s citizens and political system during the White Terror and authoritarian period.” This apparently willful ignorance hurts the KMT’s image among a great many of Taiwan’s citizens, and particularly among younger voters.

Challenges

Implementing these reforms will not come without challenges. Older, more conservative KMT members will undoubtedly push back against any attempt to embrace the CIPAS rulings. These members care far more about this issue than the younger generation. Historically, the KMT has been averse to any moves that would cause the party to “lose face.” [1] Reforming in this way would undoubtedly hurt the image of those senior KMT members who benefit from these assets and would give a visible “win” to the DPP. To prevent these two outcomes, the more senior members will likely continue to fight tooth and nail to maintain these assets. [2]

These reforms are further challenged by the greater salience of other issues among younger KMT members. Politicians only have so much time and money to commit to their causes, and it appears little of either has been given to the asset issue. Instead, younger KMT members have ascribed much more importance to issues such as US pork imports and national security. Without an increase in momentum around the ill-gotten asset problem, it is likely that progress will be limited and that the issue will not be resolved.

Finally, the reemergence of former KMT lawmaker and current media personality Jaw Shaw-kong (趙少康), and the recent push for Han Kuo-yu to enter the race for KMT leadership, could threaten to undermine reform before it has even begun. Both Jaw and Han have espoused pro-China and pro-unification views in the past, and both have expressed interest in the KMT chairmanship. Growing support for these two candidates suggests that some KMT members may want to disregard all calls for reform. Should Johnny Chiang and the pro-reform wing of the KMT wish to change its image before the 2022 elections, the party assets issue appears to be a highly visible and definitive way to do so.

Overcoming these challenges will require substantial—and likely painful—reform. By accepting the CIPAS, and embracing the constitutionality of the results, the KMT could reinvigorate support from voters who want to see the KMT change. While there will undoubtedly be challenges along the way, it will be incumbent upon the KMT and Johnny Chiang to showcase their ability to reform—and embracing the CIPAS is the best way to do so.

The main point: Taiwan’s elections are fast approaching, and, as of yet, the KMT has failed to implement any substantial reforms. By embracing the CIPAS rulings and finally putting an end to the ill-gotten assets issue, both the KMT and Johnny Chiang can increase their chances at electoral success.

[1] Interview with anonymous CIPAS member, February 13, 2021.

[2] Ibid.

(Feature photo from Han Kuo-yu / Facebook)