Publication: China Brief Volume: 2 Issue: 10

By John Tkacik

Taiwan Army Colonel Liu Kuan-chun is, by all accounts, a sleaze ball. Colonel Liu was a finance officer in the National Security Bureau (NSB), Taiwan’s spy agency, and disappeared in September 2000 with several million U.S. dollars of espionage cash, sparking an intensive criminal investigation raising concerns about the security of Taiwan’s intelligence apparatus.

It also raised questions about the loyalty of Taiwanese military and intelligence officers who are not native to Taiwan. Those officers who claim a their heritage in mainland China have not been shy about proclaiming their doubts about the loyalties of Taiwan’s new political leaders to the idea of “One China.” The Democratic Progressive Party, they say, is committed to Taiwan’s permanent separation from China. It is the DPP, they say, who are disloyal, not the mainlander officer corps in Taiwan’s armed forces.

But it doesn’t help their case that several key intelligence officers have already defected to Beijing. Colonel Liu is also said to have decamped to Canada, where he resides on a People’s Republic of China passport. Liu seems also to feel that if he managed to divest the NSB of several million dollars in funds that would otherwise have been used against Beijing, then so much the better.

This lies at the root of Taiwan’s latest spy scandal.

It seems that, in addition to the money Liu had taken, he also managed to lay hand on thousands of pages of highly secret financial records, both in image and data form, which he burned onto a computer CD-ROM disk. The documents had codenames as well as real names of several assets the NSA had been working on. The documents bore signatures and annotations from various officials in the NSB hierarchy, right up to President Lee Teng-hui himself. But he didn’t leak these documents to Taiwan’s press immediately. He waited eighteen months.

This, in itself, was odd. As was the fact that the documents were crammed onto the CD-ROM disk with compression software developed in Mainland China–not in Taiwan. The suspicion, of course, was that the documents were actually collected after Colonel Liu’s defection, and transferred to a CD-ROM by someone familiar with the Chinese-origin software programs.

Of course, there were other curious developments. Copies of the original CD-ROM were leaked to a major opposition party, the mainlander-dominated People’s First Party (PFP), to Singtao Daily, a pro-Beijing newspaper in Hong Kong, and to Taipei’s “Next” magazine, run by Hong Kong emigre Jimmy Lai. Lai, a dashing entrepreneur, had gotten himself on Beijing’s bad side for supporting pro-democracy forces at the Tiananmen demonstrations in 1989, and found his business operations in China under increasing political pressure. After his journalistic efforts in Hong Kong (Apple Daily) lost vast amounts of money, Lai moved to Taipei, where his muckraking enthusiasm has a bigger audience.

There is an appetite for scandal. Taiwan’s secret intelligence slush funds came under renewed political interest in January of this year when the People’s First Party alleged that one of President Chen Shui-bian’s top advisors, Mainland Affairs Commission chair Tsai Ing-wen, had received about US$260,000 from secret NSB accounts to fund research into “special state-to-state relations,” a two-China’s description of Taiwan-China relations coined by former President Lee Teng-hui in 1999 when he was still president. PFP legislator Diane Lee said that the NSB financed Dr. Tsai’s research from both official and secret accounts. This, said the PFP lawmaker, was evidence that “the NSB is out of control.” “How,” he asked, “can it get away with using money like that?”

On April 22, Next magazine published a seven-page expose of NSB slush-fund improprieties, featuring photocopied images of “top secret” intelligence documents complete with codenames, signatures and marginalia. In the documents, “Next” contended, was evidence that Taiwan had paid vast amounts of money to foreign leaders. Former South African President Nelson Mandela was named–but those reports had already appeared in Johannesburg newspapers as early as 1995. Other recipients of Taiwan money included the Nicaraguan President Arnoldo Aleman and the Panamanian government.

Also named were several prominent Bush administration officials long known to be sympathetic to Taiwan, including deputy defense secretary Paul Wolfowitz, Assistant Secretary of State Jim Kelly, State Department intelligence chief Carl Ford, former defense official Kurt Campbell, and Undersecretary of State John Bolton. Hong Kong’s Singtao Daily and Taipei’s own China Times ran separate reports suggesting that these men were Taiwan intelligence assets. In fact, the substance of the stories only indicated that they, like so many other American academics and specialists, had received money, in round-about channels, that may (or may not) have included money from Taiwan’s NSB. Clearly, the only reason for including their names in the media reports was to embarrass them.

But no names of officials or academics known to be friendly to Beijing were included. There is, then, a mass of circumstantial evidence that leads to the conclusion that the naming of names was not motivated by a search for the truth or a commitment to the public’s right to know. It was an attempt to neutralize their support for Taiwan. Now, who would want to do that?

John Tkacik is Research Fellow in China Policy in the Asian Studies Center at The Heritage Foundation.

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