SOUTH CHINA MORNING POST WEDNESDAY, NOVEMBER 19, 2008

A15

Frank Ching
Experience is a wise teacher in an economic crisis. The frank.ching@scmp.com

key is not to repeat past mistakes, writes Donald Tsang

Suspect intentions

Resist temptation T
he big news from Taiwan is the handcuffing and detention
of former president Chen Shui-bian, who is being held in a
money-laundering investigation. He immediately began a
hunger strike and was taken to hospital after five days. Mr
Chen’s detention followed that of a series of top people in
his administration. These arrests have prompted concern over the
political neutrality of the judicial system, as well as procedures
followed by the prosecutor’s office, in the wake of the return to
power of the Kuomintang after eight years’ rule by the Democratic
Progressive Party.
Twenty legal scholars from the US, Canada, Europe and

I
would like to talk about what I see
are the five temptations that
governments around the world will
need to resist if we are going to avert
the threat of a prolonged and
painful global recession.
The first temptation is to go it
alone and act in isolation. This is a
global crisis on a massive scale, but
it affects different economies in
different ways. There is no one-size-fits-all
solution. Every economy has needed to act
quickly and decisively to address their own
particular problems. Some economies
have injected funds into the banking
system, some have nationalised banks,
many have guaranteed bank deposits to
provide stability and certainty in the
banking system, some have helped with
loan schemes for business and industry.
At the same time, what we do in our
economies can immediately affect other
economies. If this crisis has proved one
thing, it is that the world is linked together
like never before. So, governments need to
ensure that, whatever they plan, it is a co-
ordinated plan that won’t create
uncertainty in other markets and
reverberate backwards. For example, many
Governments may finally
understand Asia’s crisis
10 years ago was a wake-
up call to reform the
global financial system
...............................................................
governments have introduced time-limited
guarantees to protect bank deposits and
loans. When these guarantees are
withdrawn, it should be co-ordinated to
avoid destabilising fund flows between
economies. We must keep the lines of
communication open. The G20 meeting
convened just last weekend should go a
long way to addressing this point.
The second temptation is to neglect the
need for an exit strategy. This relates to the
various measures that have been taken to
stabilise national financial systems and
global financial institutions. In simple
terms, this means the use of taxpayers’
money and extraordinary public policies
which are not sustainable to keep financial
institutions [and] corporations afloat.
As we discovered during the Asian
financial crisis in 1998, desperate times call
for desperate measures. In Hong Kong’s
case, that involved buying the full range of
Hang Seng Index constituent stocks to
ward off a concerted and systematic attack
on our currency peg and stock market. At
that time, our actions were greeted with a
mixture of understanding as well as
disbelief; acceptance as well as outrage;
and trust as well as deep cynicism.
I think it’s fair to say that many pundits,
initially, were sceptical about our reasoning
and our motives. What we said we would
do – and what we did do – was to devise a
way to detach ourselves from those
investments in a gradual and orderly way
that did not disrupt the normal function of
the market. I believe the same approach is
needed again – except this time on a global
scale. When governments start to divest
themselves of these extraordinary
investments, they need to do so in a totally
open and transparent way.
The third temptation is for
governments to cut back on public
spending in response to the global
economic slowdown. Last week, our
sovereign, China, announced a huge
US$586 billion economic stimulus package
over the next two years. The International
Monetary Fund has said that this package
will not only influence the Chinese
economy, it will influence the world
economy by supporting demand.
Undoubtedly, Hong Kong and other
economies will benefit from this package
through the export of goods, services and
raw materials. Other governments have
also announced economic stimulus
measures, including Hong Kong.
The message we need to reinforce is
that economies – big and small – can help
ease the global crisis with their domestic
spending programmes. Now is not the time
for governments to cut back on spending.
Government spending programmes funnel
money back into the community where it is
needed most – into jobs, and into demand
for goods and services. Creating jobs also
helps lessen the welfare burden.
This brings me to the fourth temptation
– that is, to close our doors because of
protectionist sentiment. As economic
recession sets in, following corporate
closures and the fall in consumption,
unemployment will promptly rise. This can
lead to protectionism that may poison
domestic politics.
The world has benefited greatly from
more open and free trade and investment
regimes. Asia, in particular, has benefited
enormously from trade liberalisation.
Hong Kong, of course, is one shining
example. So too, are [mainland] China,
Taiwan, Japan, Korea and Singapore, along
with Malaysia, Thailand and, more
recently, Vietnam.
At a time of such uncertainty,
governments around the world have a rare
chance to create certainty by showing a
renewed resolve to deepen – rather than
step back from – economic engagement.
The fifth and final temptation is to
overregulate in response to the financial
crisis. While the G20 meeting rightly
stressed the need for enhancing sound
regulation, it did not lose sight of the
danger of overregulation that would stifle
innovation or hamper economic growth.
The challenge ahead is to make our
regulatory regimes more effective over the
economic cycles.
The globalisation of financial services
has highlighted the dark downside of closer
economic integration – that is, the risk of
contagion spreading rapidly and widely
when things go wrong. What we need to
work on now is a better system, with better
risk management, better early warning
systems, and better response mechanisms.
And it needs to be a concerted, co-
ordinated and global effort.
In cities such as London, Hong Kong
and New York, the financial services sector
is bound to innovate and to expose itself to
Australia have published an open letter warning that Taiwan’s
hard-earned democracy was in jeopardy. They identified half a
dozen people under detention and said that “while one or two of
the accused have been formally charged, the majority is being held
incommunicado without being charged”.
Two years ago, when Mr Chen was still president, the Taipei
district attorney charged Mr Chen’s wife, Wu Shu-chen, with
corruption over the handling of secret presidential funds. She
fainted at the opening session of the trial and has since been
absent from court 17 times, on the grounds of poor health.
At the time, prosecutors said they had enough evidence to
indict Mr Chen but could not do so because of presidential
immunity. But, on May 20, after he stepped down and was
succeeded by Ma Ying-jeou, prosecutors announced that they had
“formally started the investigation of the special expenses case
concerning former president Chen.”
While he was in office, prosecutors could not access certain
classified documents. The new president declassified them –
mostly receipts and records of the use of special expenses – and
was accused by Mr Chen’s lawyers of being “politically motivated”.
The Taipei district court ordered his
detention after an 11-hour hearing.
These arrests Under Taiwanese law, suspects can be
detained for up to four months
have prompted without an indictment.
concern over In August, Mr Chen publicly
admitted misstating election finance
the political expenses and said his wife had sent
millions of dollars overseas without his
neutrality of knowledge. “My conscience has told
me that I cannot continue to lie to
Taiwan’s myself or to others,” he said. “I have, in
judicial system the past, committed deeds that are
...................................... against the law and I am willing … to
apologise to the people.” However, the
claims against him go beyond election financing. They relate to
alleged money laundering, corruption and abuse of power.
Mr Chen’s allegations of political persecution have not been
sympathetically received. Former president Lee Teng-hui
defended the detention and said that Mr Chen “cannot blame the
risk. That is, after all, how we got into this world for his own wrongs”. And Shih Ming-teh, a former DPP
mess in the first place. What we need to do, chairman, said that Mr Chen had “trampled the dignity of the
of course, is close the loopholes that Taiwanese people and betrayed their expectations”, adding that a
allowed this to happen. hunger strike would not make him a political prisoner.
I hope that the work we are seeing now Nonetheless, the detention of other former DPP officials has
maintains its momentum. That national clearly stirred concern. An American legal scholar, Jerome Cohen,
governments continue to stimulate their has suggested that Mr Ma appoint a commission of impartial
economies, which helps to keep capital experts to review recent cases of prosecutions.
flowing through the global system; that Mr Cohen, Mr Ma’s mentor while he was a student at Harvard
national governments continue to act Law School, said he had not seen evidence to justify criticism that
collectively through such forums as the Taiwan’s government was using its authority to unfairly single out
G20, the WTO and Apec to look for global opposition leaders. But he felt the president should appoint a blue-
solutions; and that national governments ribbon independent commission of experts in criminal justice
finally understand that the Asian financial whose integrity and impartiality could not be questioned.
crisis 10 years ago was a wake-up call to It is unclear whether Mr Ma will respond positively to this
reform our global financial system, but in proposal. However, the best way forward is to either release or
the end it was an opportunity lost. This charge those under detention. One detainee, Su Chih-fen, a
time, for the sake of globalisation and magistrate of Yunlin county, was released on Friday after she was
closer engagement between the people of charged with accepting US$640,000 in bribes.
the world, we must get it right. While it is lawful in Taiwan to detain suspects for long periods
............................................................... without indicting them, it is not good to do this too frequently. In
This is an abridged version of Chief fact, for the good of Taiwan’s international image, prosecutors
Executive Donald Tsang Yam-kuen’s speech should charge those being detained as soon as possible.
delivered last night at the annual dinner of .................................................................................................
the Trade Development Council in London Frank Ching is a Hong Kong-based writer and commentator

Other Voices
Trade partners can
force junta’s hand
......................................................
Sein Win
Recently, the world was given a
moment to mark the 13th year of
incarceration of Nobel Peace
laureate Aung San Suu Kyi. Yet, her
case is just the tip of the iceberg. In
the last weeks, four legal
professionals in Burma have been
imprisoned via a kangaroo court
trial, for the crime of defending
democracy.
Their number adds to the more
than 2,000 political prisoners
currently suffering in Burma’s jails.
Until they are freed, Burma itself
cannot be free.
In the year following the Saffron
Revolution, the Burmese military
junta has been busy. On the one
hand, it has been kept active by
increased international attention
following last year’s demonstrations,
which was further bolstered by the
aid effort following the devastating
cyclone that struck in May.
In this context, the junta has
been trying its best to look benign
and reformist. Like eager – if
bumbling – suitors, the generals
have been courting the world’s
favours in an impossible attempt to
make themselves look good.
However, there are also moves
they have been trying to keep
hidden. For instance, the military
has been rounding up democracy
supporters, rushing them through
sham trials, and throwing them in
jail.
The latest targets of the wrath of
Burma’s dubious legal system had
lodged complaints with the courts
that their clients had not been given
fair trials.
These are not isolated examples,
or even rarities. They are evidence of
a culture of injustice which is
inflicted on every level of Burma’s
long-suffering society.
We believe there are up to 70
political activists – and that term is
used very liberally – involved in 45
cases currently working through this
skewed legal system.
These cases violate, at the very
least, Articles 6, 7, 8, 9, 10 and 11 of
the Universal Declaration of Human
Rights, which Burma supported
when it was introduced. They also
counter the United Nations Charter,
to which all UN nations, Burma
included, are obliged to adhere.
The pro-democracy movement
has been heartened by the largely
behind-the-scenes initiatives of the
Chinese government. Yet, despite
these actions, China still deals
openly with Burma, including
through the supply of military
hardware to its generals.
India and Russia make up
Burma’s other major trading
partners. Both China and Russia, of
course, sit as permanent members
on the UN Security Council and
have used their veto to negate any
stronger action of the part of the
world body.
These negative negotiations
between Burma and major trade
partners must stop. Trade between
Burma and the outside world must
be sustainable or it must cease.
Further, under no circumstances
should trade become the driver of
diplomatic agendas. Leading
governments trading with Burma
must use their clout to enforce
change, lest the horrors of Burma
reflect too sharply upon them.
......................................................
Dr Sein Win is prime minister
of the National Coalition
Government of the Union of
Burma, the government-in-exile
Legco shows courage in
holding Lehman probe
......................................................
Joseph Wong
Last Wednesday, an overwhelming
majority of lawmakers supported a
motion to invoke the Legislative
Council (Powers and Privileges) Or-
dinance to investigate the sale of Leh-
man products.
This gives the Legco subcommit-
tee the power to force senior bank
managers to hand over confidential
documents, and to summon wit-
nesses to testify at public hearings.
Members vowed to find out if any in-
stitutions or officials were to blame
for the billions of dollars in losses suf-
fered by investors of such products.
The motion was carried despite
the plea by the banks to be allowed to
proceed unimpeded with their buy-
back plan for the products. Most
Legco members also chose to brush
aside government concerns that
summoning executives to give testi-
mony would tarnish Hong Kong’s
reputation as a financial centre.
It was not the first time Legco had
invoked its special investigatory
powers. Recent examples include in-
vestigations on the short piling of a
public housing estate and the gov-
ernment’s handling of the severe
acute respiratory syndrome epi-
demic. But an investigation involving
19 prominent banks operating in
Hong Kong, not to mention the gov-
ernment and two financial regulators
– the Monetary Authority (HKMA)
and the Securities and Futures Com-
mission (SFC) – is significant.
It may be easy to conclude that the
Democratic Alliance for the Better-
ment and Progress of Hong Kong, a
staunch supporter of the govern-
ment, succumbed to the strong pres-
sure from affected investors and de-
cided to ignore the government’s
plea. But, as a political party interest-
ed in winning directly elected seats in
Legco, it cannot afford to be on the
wrong side of public opinion.
Many people want to find out the
truth and where responsibility lies.
They do not accept that anyone
should be above suspicion. This is the
lesson for government and the busi-
ness sector. It is not popular politics.
While the Hong Kong Association
of Banks has pledged to co-operate, it
Many people want to
find out the truth and
where responsibility
lies. No one should
be above suspicion
......................................................
also urged lawmakers to respect the
confidential nature of business infor-
mation, and safeguard customers’
personal information. This is a valid
point, but it should not be overstated.
It was right for Legco to reject the
government’s argument that the in-
vestigation would have a negative
effect on Hong Kong’s status as a
financial centre. This line of reason-
ing implied that the subcommittee’s
public hearings might turn out to be
an unruly public trial of the banking
sector. There is no evidence to sub-
stantiate this claim.
The most important aspect of the
investigation is the need for the sub-
committee to conduct its business
professionally and effectively. The in-
vestigation should be conducted to
the highest professional standards
and its conclusions should pass the
most rigorous examination. The re-
cords and reports may be used as evi-
dence or testimony in subsequent
court proceedings involving claims
for compensation or damages. Af-
fected investors and the public at
large expect to see the subcommittee
doing a professional job.
Raymond Ho Chung-tai, chair-
man of the 25-member subcommit-
tee, has estimated it will take about a
year to complete the investigation.
Many people would like to see a
shorter timeframe. If the subcom-
mittee organises its work properly,
this may be possible.
First, it should not rush into call-
ing witnesses from the banks in the
early part of the investigation. It
should let the banks proceed with
their buy-back plan, set to start next
month. The HKMA and the SFC
should be the first to testify. Second,
the subcommittee should draw up a
timetable, and stick to it diligently.
In conducting this investigation,
Legco has taken on an enormous and
complicated task. While it is calling
the government and banks to ac-
count for their actions, it is also put-
ting the ability, professionalism and
integrity of members on display.
......................................................
Joseph Wong Wing-ping, formerly
secretary for the civil service, is
an adjunct professor at Chinese
University of Hong Kong
Contact us Agree
or disagree with the
opinions on this
page? Write to us at
letters@scmp.com
If you have an idea for an opinion
article, e-mail it to oped@scmp.com
Shame of torture will
haunt US for years
......................................................
Eugene Robinson
“I have said repeatedly that I intend
to close Guantanamo, and I will
follow through on that. I have said
repeatedly that America does not
torture, and I’m going to make sure
that we don’t torture. Those are part
and parcel of an effort to regain
America’s moral stature in the
world.”
That unequivocal passage from
president-elect Barack Obama’s first
extended interview since the
election, broadcast on 60 Minutes on
Sunday night, was a big step towards
healing the damage that the Bush
administration has done not just to
the nation’s image, but to its soul.
Amid the excitement of the
election and the urgency of the
economic crisis, it has been easy to
lose sight of the terrorism-related
“issues” that defined George W.
Bush’s presidency and robbed
America of so much honour, stature
and goodwill.
I put the word issues in quotation
marks because torture can never be
a matter of debate. Yet the Bush
administration sought to numb
Americans to what has traditionally
been seen as a clear moral and legal
imperative: the requirement that
individuals taken into custody by
our government be treated fairly and
humanely.
This doesn’t mean handling
nihilistic, homicidal “evildoers” with
kid gloves. It means being as certain
as possible that the people we are
holding are indeed real or would-be
terrorists, not unlucky bystanders.
At Guantanamo, at Abu Ghraib
and in a gulag of secret CIA prisons
overseas, the Bush administration
failed to live up to these basic
responsibilities, and sullied us all.
A new study by researchers at the
University of California at Berkeley,
based on interviews with 62 men
who were held for an average of
three years at Guantanamo before
being released without ever being
accused of a crime, found that more
than a third said they were turned
over to their American captors by
warlords for a bounty.
Two-thirds of the former
detainees have had psychological
problems since their release, and
many are now destitute, shunned by
their families and villages. None has
been compensated for the ordeal.
Years from now, we will be
shocked to see those pictures of
naked prisoners being humiliated
and abused at Abu Ghraib.
Years from now, we will know the
full truth of the clandestine CIA-run
prisons where “high-value” terrorist
suspects were interrogated with
techniques that both civilised norms
and international law have long
defined as torture. From what we
already know, it’s hard to say which
is more appalling – the torture itself,
or the tortured legal rationalisations
that Bush administration lawyers
came up with to “justify” making
barbarity official US policy.
More reports like the UC
Berkeley study will come out, but
this is not a task that can be left to
academic researchers alone. The
Obama administration has a duty to
conduct its own investigation and
tell us exactly what was done in our
name. Realistically, some officials
who may deserve to face criminal
charges will not. But to restore US
national honour and heal our
national soul, we need to know.
......................................................
Eugene Robinson is a
Washington Post columnist