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Taiwan’s Lenient Approach to Financial Crime Exposed

The recent death of Wang You-theng, the founder of the now-defunct Rebar Asia Pacific Group, has shed light on Taiwan’s surprisingly lenient treatment of financial criminals. The embezzlement case involving NT$32 billion (US$993.02 million) is just one example of many instances where financial crime goes unpunished or is treated with a slap on the wrist.

A Pattern of Leniency

The case of former Singfor Life Insurance Co chairmen Huang Cheng-i and Eric Teng, who allegedly embezzled NT$12.7 billion from their company, is nearing its final stage. Meanwhile, Dingli Group founder Chin Hsiang-yu has jumped bail and fled to China as he appeals a verdict in an investment scam that earned him NT$13.6 billion.

A Culture of Impunity

Financial crime is so common in Taiwan that it only makes headlines if the amount involved is at least NT$10 billion. Moreover, defendants who abscond with stolen money are rarely considered newsworthy. The public outcry over the widening wealth gap and lack of ethics during the Sunflower movement seems to have subsided since a different political party took office.

A Broken Judicial System

Taiwan’s judicial system has been criticized for being ineffective in combating financial crime. Prosecutors are often left scrambling to catch defendants who flee the country, leaving them with little chance of retrieving stolen funds. The focus should be on seizing and confiscating illegal proceeds to deprive criminals of their profits and make financial crime a losing game.

Outdated Laws

However, Taiwan’s laws on confiscation date back to the Qing Dynasty in 1905, based on Japan’s criminal code from the Meiji period. This conviction-based confiscation model has many flaws and loopholes, as seen in cases like Wang’s and others.

Flaws and Loopholes

One major issue is the lack of third-party confiscation options. Illegally obtained money is often transferred to shell companies before being moved on, making it difficult for authorities to seize assets. The law considers “natural persons” and “legal persons” as independent entities, preventing shell paper companies from being targeted for confiscation.

Another problem is the inability to issue an independent confiscation order when a suspect cannot be found. This allows defendants who flee the country to enjoy the proceeds of their crimes. In contrast, North American and European countries have adopted non-conviction based confiscation models, which do not require a conviction to seize illegal assets.

A Step in the Right Direction

The recent passing of a bill allowing for third-person confiscation, independent confiscation orders, and other new measures is a step in the right direction. However, enforcement will depend on legal practitioners adapting to the new model and related legislation being passed to prevent future problems.

By Lin Yu-hsiung, Professor at National Taiwan University

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