President loses `soft coup' libel lawsuit

DOWN, BUT NOT OUT: The president was disappointed with the ruling, but vowed that he would lodge an appeal over the decision and deliver more evidence to the court

By Rich Chang

STAFF REPORTER

"Chen was unable to offer sufficient evidence and prove that Lien, Soong or the pan-blue parties had attempted to launch such a coup against the Democratic Progressive Party government."－Taipei District Court ruling

President Chen Shui-bian yesterday lost the libel suit brought against him by opposition leaders for comments he made suggesting they had tried to engineer a "soft coup" during the aftermath of last year's presidential election.

A press statement released by the Presidential Office last night expressed the president's regret over the decision, but said that he will appeal the ruling and present more evidence.

Taipei District Court ruled yesterday that Chen must pay former Chinese Nationalist Party (KMT) chairman Lien Chan and People First Party (PFP) Chairman James Soong NT$1 each in compensation for his remarks concerning the alleged coup by the pan-blue parties.

"Chen was unable to offer sufficient evidence and prove that Lien, Soong or the pan-blue parties had attempted to launch such a coup against the Democratic Progressive Party (DPP) government," the court ruling said.

"The coup remarks made by Chen were a very serious accusation against the nation's top opposition politicians which questioned their loyalty to the country. Therefore the court has decided that Chen is guilty of libeling both Lien and Soong," the ruling added.

In addition to the NT$2 in compensation, the ruling said that Chen must publish half-page apologies in the nation's major Chinese-language newspapers.

However, the judges rejected Lien and Soong's request that the president publish apologies in major international newspapers.

Chen told the public last November that the KMT and PFP had tried to engineer a coup in response to what they claim was unfairness involved in the result of the presidential election last March.

Chen said shortly after the election that the pan-blue camp had tried to persuade senior army generals and officers to launch a "soft coup" to bring about a change of government.

Chen, as head of state, is protected from any criminal suits but can still be held liable for damages.

The ruling yesterday marked the second time in recent weeks that an incumbent or former president has lost a slander suit.

Last month former president Lee Teng-hui was ordered to pay Soong NT$10 million (US$298,500) in compensation by the Taipei District Court for saying that Soong had abandoned pan-blue supporters during an April 10 demonstration and returned home to play mahjong.

Lee Fu-dian, the lawyer representing Lien and Soong, said in a statement that the ruling highlighted the fact that both the DPP party and the president had failed to "distinguish between freedom of speech and the right to resistance."

Lee also called Soong straight after the ruling was issued, and said Soong was "thankful for the decision."

"The ruling upholds the public's expectations of justice ? I respect the fair and just performance of the justice system," Lee reported Soong as saying.

KMT spokeswoman Cheng Li-wen yesterday applauded the justice authorities for making a fair and just decision.

"I hope this ruling will be a lesson to Chen Shui-bian and other politicians, force them to pay more attention to their deeds, set a good example for society and in future exercise some self-restraint," she said in a statement.

China investment hurts economy

By Huang Tien-lin

There have been reports of an uninterrupted foreign capital inflow into the Taiwanese market over the last 29 days (as of Dec. 15). Foreign investors contributed NT$220.4 billion (US$6.5 billion) during this period, and a total of NT$520.3 billion (US$15.3 billion) for this year. These are record figures. As a result, the nation's stock market bounced back with a gain of 700 points and briefly stood at 6,200 points.

According to statistics, Taiwan's stock market has attracted the largest capital inflow in Asia this year. As of Nov. 11, the amount totalled US$13.9 billion. In contrast, South Korea experienced foreign capital outflow of more than US$1.45 billion. Why would foreign investors abandon South Korea and other Asian markets for Taiwan? The explanation is that foreign investors overestimated Taiwan's economic performance last year and invested a total of US$8.67 billion in the local stock market. As a result, Taiwan's capital inflow was ranked third in Asia after Japan and South Korea last year. But, Taiwan's economic picture was not as rosy as predicted because of excessive investment in China by Taiwanese businesspeople. As a result, whereas South Korea saw a stock market rise of 27.5 percent and Singapore recorded a 21.64 percent increase, Taiwan's stock market grew by only 4.23 percent. This year, Taiwan's economic performance has been even worse, and as of the end of September, the stock market had fallen by about 3.48 percent.

What should we do about the continued lackluster performance of the nation's stock market, which has been in sharp contrast to the strong performance of those in other countries? The only solution for foreign investors is to seek lasting recovery by balancing accounts. This was where the so-called "November gamble" came from. As of right now, Taiwan's stock market has been positive, but whether or not the balancing of accounts will work depends on foreign investors' stock choices.

Which stocks do foreign investors favor? Between Oct. 31 and Dec. 7, capital inflow was primarily concentrated in concept stocks of Taiwanese firms that are based in Taiwan and uphold the concepts of "go slow, be patient" and "effective management." These companies have not invested much of their capital in China. In other words, their operational concepts are similar to South Korea's Samsung and Japan's Toyota, whose primary production headquarters are based in their countries of origin. (Note: SinoPac Holdings and Mega Holdings have not invested in China at all because of the above-mentioned Taiwan-based concept.)

Why don't foreign investors buy Taiwanese stocks that are strong in China's stock market, such as Uni-President, Taiwan Glass, Namchow, and Sampo? These firms took the "opportunity" to pioneer investing in China. They incorporate their "resources in China" and advocate the theory of the two ends of the "smile curve." In theory, they should have the ability to make profits and be excellent businesses with high operational performance. So, why aren't they attractive to foreign investors? The reason is simple: excessive ambitions to invest in China only serve to distract a company from its business operations since management are obliged to frequently fly back and forth between the two sides of the Taiwan Strait. Thus their minds are not on transformation and upgrading, which are important business operational features. As a result, the two ends of the "smile curve" -- manufacture and sales -- are left unsupported and the whole thing collapses.

Facts speak louder than words. No matter how the pro-China media try to praise China-based Taiwanese businesses, the real contributers to Taiwan's economy and its stock market are those Taiwanese businesses whose "main production lines" are based in Taiwan. It is only because of these Taiwan-oriented businesses that Taiwan's stock market still exists and remains a target for international investors.

Recently, the pro-unification media published a feature report of the top 1,000 China-based Taiwanese businesspeople, and gave these people a great boost. Given the large scale of these China-based Taiwanese businesses, we see that they have successfully made a lot of money. But, if you take a closer look at the top 50 Taiwanese firms in China, about 80 percent of them never repatriate their money. This is to say that these China-based firms do not contribute to Taiwan's stock market.

Of course, we should not nit-pick about how much money these companies repatriate. After all, it is human nature to invest in the place where you first made your money. Nevertheless, the facts show that the notions of "go slow, be patient" and "effective management" are the core strengths supporting Taiwan and its economy. If the government takes the advice of businesspeople and abandons these core strengths for transient political benefits (as it may be tempted to do in light of its major setback in the recent local elections) by permitting Taiwan's wafer foundry, sensor, flat panel and banking sectors to relocate to China, this will be the beginning of the end for the Taiwanese people.

Huang Tien-lin is national policy adviser to the president.