20110728 DPP questions KMT’s massive stock earnings

DPP questions KMT’s massive stock earnings

By Vincent Y. Chao / Staff Reporter

The Democratic Progressive Party (DPP) yesterday raised more questions about Chinese Nationalist Party (KMT) finances after reports said the KMT had earned billions of NT dollars from stock dividends.

Compiling audited information from the Ministry of the Interior, DPP officials said the KMT had earned NT$6.9 billion (US$239.7 million) from stocks since 2008, far outpacing fundraising or government subsidies.

The earnings came despite a downturn in stocks between 2008 and 2009 during the global economic downturn, a period when the KMT nevertheless took in NT$2.5 billion from its stock portfolio, DPP spokesperson Liang Wen-jie (梁文傑) said.

The DPP has accused the KMT of using the money to subsidize election campaigns, giving it an “unfair” advantage, given that most of the assets were controversially accumulated during the nation’s period of one-party rule prior to the 1990s.

The DPP raised the questions after examining information that political parties are required to disclose on an annual basis. The latest such disclosure was made on Friday, with the release of the KMT’s finances for last year showing that the party made NT$3.5 billion in stock earnings.

“Central Investment Holding Co managed to maintain a 13.8 percent return in 2008, despite an overall 46 percent drop in the stock market,” Liang said, referring to a KMT-associated holding company that the party has promised to sell.

Sparking charges of insider trading, Liang said “all of Taiwan should have simply put money in whatever the Central Investment Holding Co invested into.”

The financial disclosures come despite remarks by KMT officials that most party assets have already gone into a trust fund no longer directly controlled by the party. Control over the holding company has also been divested to six senior fund managers, the KMT has said.

However, the DPP said those fund managers still had connections with the party, making claims that the company was no longer KMT controlled “baseless.”

Earnings from the holding company comprised the majority of the KMT’s stock earnings.

“Of these six so-called senior managers, four have KMT connections as they were formerly party posts,” Liang said. “How can the KMT say that they have already divested control of the company?”