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Friday, 26 October, 2001, 09:11 GMT 10:11 UK
Wealth probe for 'world's richest' party
KMT election poster
KMT's Lien Chan lost heavily in 2000 presidential elections
By Michael Bristow in Taipei

As Taiwan gears up for elections at the end of the year, the main opposition party, reputedly the world's richest, is facing a wide-ranging investigation into the source of its huge wealth.

The Kuomintang (KMT) or Nationalist Party, which ruled Taiwan for 55 years, has been accused of taking assets from the Japanese in Taiwan at the end of World War II in what was one of the murkiest periods of the island's history.

KMT milestones
1894 - founded by Sun Yat-sen
1926 - Chiang Kai-shek assumes leadership
1945 - Taiwan handed to China
1949 - KMT defeated by communists in China
1949 - Kuomintang government in Taiwan established
1975 - President Chiang Kai-shek dies
1988 - Lee Teng-hui becomes first native President of Taiwan and KMT leader
1996 - Lee wins first democratic elections
2000 - KMT loses election and Lee steps down as party chairman
2000 - Lee Teng-hui expelled from KMT
The KMT is said to have illegally seized land and property worth millions of pounds when the Japanese were forced to flee Taiwan, which they ruled as a colony from 1895-1945.

An initial investigation by the government's audit arm, the Control Yuan, has found there is a case to answer and now the Taiwanese Cabinet has ordered a further inquiry.

Campaigners say many KMT assets should be returned to the government. But the nationalists say the accusations are a cynical political move ahead of elections in December.

Taiwanese voters go to the polls on 1 December to choose lawmakers for the country's national assembly, the Legislative Yuan. There will also be elections for county chiefs and city mayors.

Murky history

The row over the KMT's assets dates back to 1945 when Taiwan was handed back to China.

KMT headquarters:
The KMT says reports of its wealth are exaggerated
At that time, many assets in Taiwan were handed over to the KMT, which was then the ruling party in Beijing. They allegedly remained under KMT control, and not given to the government as they should have been.

Dr Joseph Wu, deputy director of the Institute of International Relations at the National Chengchi University in Taiwan, said: "Back in 1945 many of the properties owned by the Japanese were surrendered to the Nationalist government.

"But at that time there was no distinction between party and state. So whatever was returned to the government was at the disposal of the KMT."

Plunder

Campaigners say the KMT continued to plunder the country's assets when it made Taiwan its permanent home in 1949, following its defeat at the hands of the communists in China.


If the transfers are found to be illegal we will hand them back, but we are 100% sure it was all legal

KMT spokesman Justin Chou
Government officials are accused of selling land and property to the KMT at cheap rates, and allowing the party's businesses to benefit from inside information.

Dr Wu said: "The KMT was in power for more than 50 years, it was all-powerful during the authoritarian era and did all kinds of things."

The KMT is thought to be one of the world's richest political parties - some say the richest - with major investments on the Taiwanese stock exchange and in property.

The party says it is worth less than $1bn, but political analysts say the real figure could be up to $10bn.

Gathering momentum

A move to force the KMT, led for nearly five decades by Chiang Kai-shek, to return some assets to the country began when the party lost power last year.

Chiang Kai-shek Memorial Hall
Chiang Kai-shek established Taiwan as KMT's home after military defeat in China
That campaign has now gained momentum. The cabinet investigation into the allegations will attempt to dig up documents to find out exactly what assets, if any, were illegally taken over by the KMT.

The ruling Democratic Progressive Party (DPP) denies the latest move has been timed to coincide with the elections, but KMT officials believe that is the main motive.

KMT spokesman Justin Chou said: "It's a strategy by the DPP to investigate our finances to cover up their faults with the economy."

Mr Chou admitted land and property had been transferred from the Japanese colonial government to the KMT in 1945, but said it had all been done above board.

He added: "We are open to any kind of investigation. If the transfers are found to be illegal we will hand them back, but we are 100% sure it was all legal."

As the investigation dates back to 1945, it is not clear whether the government will be able to get to the bottom of the KMT's finances, but with more and more questions being asked, the issue is likely to remain contentious.

See also:

21 Sep 01 | Asia-Pacific
Taiwan's KMT expels former president
19 Mar 00 | Asia-Pacific
Lee Teng-hui accepts election blame
16 Apr 01 | Asia-Pacific
Japan pressured over Taiwan visit
21 Feb 01 | Asia-Pacific
Q&A: Taiwan's relations with China
18 Mar 00 | Taiwan Election
The view from Beijing
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