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The 33rd Cambridge International Symposium on Economic Crime 演講 專文


The 33rd Cambridge International Symposium on Economic Crime

September 7th, 2015

Ching-Chang Yen


Mr. Moderator, distinguished speakers, ladies and gentlemen,

Being invited to say a few words on this occasion is, for me, not only a unique privilege but also a genuine pleasure. At the outset, I would like to join previous speakers in extending my most sincere congratulations to ProfessorBarry Rider, OBEfor his great stewardship inorganizing this fantastic conference. The fact that he has managed to put together such a high quality forumfor thirty-three years is an unbelievable achievement by any standards.  


But now finding myself in front of all of you, I would hope that I might contribute to the ongoing conversation we are having here by providing a Taiwanese perspective on compliance in the 21st Century. With a nod to the title of this conference, and in recognition of personal limits, I will focus on Taiwan’s financial markets and the legal regimes that govern them; leaving discussions of other jurisdictions to my esteemed fellow speakers.


My perspectives on compliance in Taiwan have been built through approximately 25 years working both publicly and privately in the Taiwan financial markets. I had the good luck to be named as Deputy Finance Minister during 1996 to 2000 and Finance Minister from 2000 to 2002. Central to my work at the Ministry of Finance was a focus on the improvement of Taiwan's financial marketsand tax policies as well; and that was the primary driver for me to embark upon Taiwan’s first-ever financial reform in my capacity as Finance Minister.


What were the underlying reasons for my focus on reforming the financial markets in Taiwan? Two events were to have a great influence on shaping and driving the reforms. One related to the lessons I learned from the experience in coping with the negative impact of the 1997 Asian Financial Crisis. Due in many respects to the efforts of the Ministry of Finance in particular and the government of Taiwan in general, Taiwan’s economy weathered this financial storm and was able to escape the crisis relatively unscathed.The other strong influence was Taiwan’s pending membership in the WTO, with a portion of the price of admission being the opening of Taiwan’s rather sheltered financial markets to all WTO Members.Knowing that Taiwan’s financial players were soon to be faced with directcompetition in their home market, I felt it important to install a world class legal regime so as to sharpen the competitiveness of the domestic players.


Following my time in the public sector, I was recruited to take the chairmanship at one of Taiwan's leading financial holding companiesand held that position from 2005 to 2013.My experience as both a regulator and a participant in the Taiwan financial markets gives me a rather unique perspective on the markets there and the tension between the necessity of oversight and the operations of an efficient financial market.


Having said the above, allow me to go back to the title of this conference -- the Limits of the Law. Ladies and gentlemen, over the past two decades, we have been debating whether Taiwan's financial marketsare in need of de-regulation or increased government oversight. Interestingly enough, this long-lasting enquiry has vividly demonstrated the tensions in Taiwan's financial legal environment. In other words, it raises the question of whether Taiwan is currently confronted with the limits of law in the area of financial markets.


I would like to point out that, instead of describing the stalemate caused by the limits of law in Taiwan, we should look at the fact that Taiwan has not been properly equipped with sufficient and effective tools to finish the job of regulatory reform. I will now further elaborate by giving you some examples.


In 2001, as a result of the admirable efforts of the Ministry of Economic Affairs, the newly passed Company Act imposed fiduciary and due diligence obligations on company directors and officers for the first time in Taiwan;thereby putting in place the bedrock necessary to support the proper functioning of all companies. However, unlike the Anglo-American legal tradition, Taiwan lacked sufficient judicial and regulatory experience and that shortage prevented the Company Act from being effectively translated into useful guidelines and regulations for the government as well as market participants to follow. There has been no shortcut to get around the reality that Taiwan's judicial and regulatory branchesstill haveto undertake a long and costly journey to develop the proper legal concepts of fiduciary and due diligence obligations, so as to safeguard the rights of shareholders and other stakeholders. 


Following the footsteps of British regulators in their creation of the "Financial Services Authority, Taiwanestablished the "Financial Supervisory Commission (FSC)"and, in doing so, totally separated the jurisdiction over financial matters from the Ministry of Finance.I will come back to this policy decision later in my talk.


Since 2006, the FSC, through the revisions of Securities Exchange Act, has conducted a series of efforts to strengthen the quality of corporate governance in Taiwan. Despite the progress being made by the FSC in the creation of so many new laws, bylaws and procedures, regrettably, the Ministry of Economic Affairs has not followed suit and has failed to revise the Company Act to ensure that this body of law keeps pace with and supports the progress made by the FSC.


This had created a situation where the two bodies of law end up in competition instead of cooperation in how compliance and the financial markets are regulated.  For example, the Exchange Act requires certain publicly-listed companies to have independent directors, audit committees, compensation committees, etc., while the Company Act remains unchanged and has no such requirement. Despite the obvious discrepancy between the two bodies of law, thisparallel legal system has persisted for almost ten years and yet the FSC and the Ministry of Economic Affairs haven't taken action to address the issue. While reluctant to point this out, I would have to agree that this contradiction could easily be interpreted as a kind of limit of the reach or impact of the law in Taiwan!


In June of this year, the Honourable Dr.Sush-Der Lee, Chairman of Taiwan Stock Exchange,the Honourable Dr. Hung-Wen Chien, Chairman of Taiwan Securities Association and I had the profound pleasure to invite Professor Barry Rider to pay a visit to Taipei and address a broad audience of principal actors in Taiwan's financial sectors. On that occasion, Professor Rider kindly noted that "In recent years much has been made, particularly in Taiwan, of the importance of ensuring good governance structures and procedures in companies….While governance can never replace competent and effective external and public policing, it can still assist… It is also far more recognized today that the reputations of corporations are a valuable asset which management has a responsibility to protect."


Ladies and gentlemen, as previously mentioned, I had the pleasure of serving as Chairman for Yuanta Financial Holdings for eight years.During this time, Yuanta had a remarkable turnaround in asset quality and profitability and also underwent some meaningful consolidation. And yet, despite all of the visible success in a strengthening balance sheet and more focus business model, Iam most proud perhaps of the enhanced quality of corporate governance at Yuanta during this time, such that Yuanta hasbecomegenerally recognized by foreign institutional investors as a leading role model for corporate governance in Taiwan.


Having said the above, I am reminded of the observations made by Professor Rider in Taipei that "[corporate governance] has an educative role and proper procedures may throw up earlier misconduct particularly if reinforced with sound compliance." Yes, and that was why, even after leading one of the top role models in the industry, I still strongly urged the FSC to sharpenmuch-needed teeth to reinforce corporate governance with sound compliance measures.


My suggestions included how to differentiate between good and bad models by using both the carrot and the stick to encourage compliance; for example looking at possible ways to expose final beneficial ownerships. In this respect, I was and will hold the belief that Taiwan, at least in the area of corporate governance, has to enhance regulation to encourage good governance structures and procedures in companies. In short, Taiwan cannot afford the luxury of postponing the fine-tunings of the financial legal system.


Ladies and gentlemen, now let me come back to the policy-making decisions made in 2003 and 2004, which triggered the creation of the FSC. During this time I was stationed outside of Taiwan as Taiwan’s first ambassador to the WTO. However, I maintained a strong interest in the growth of a responsible and responsive regulatory environment for Taiwan’s financial markets.Based on the belief that financial matters should not be separated from the domain of fiscal policy, I was saddened to see the "divorce" between financial policy and fiscal policy through the creation of the FSC in July 2004. Since then, the FSC has enjoyed exclusive authority to regulate financial matters, while the MOF’s only surviving jurisdiction is over tax and the fiscal authorities.


Inpoint of fact, tax policy over financial market is the centerpiece of a healthy operating environment. Given that tax policy now falls within the jurisdiction of the MOF, the divided responsibility between the MOF and the FSC has created some heated debate over a few tax matters, with these jurisdictional turf battles leaving actors in the financial markets confused and uncertain. Sadly, I can only conclude that given Taiwan’s unique, or better to say, singular legal regime globally, such competing authorities poses a severe limit on the proper functioning of Taiwan's financial market and the regulation thereof.


Ladies and gentlemen, as I approach the end of my talk today, please allow me to borrow an observation from Albert Einstein as my conclusion: "The right to search for the truth implies also a duty; one must not conceal any part of what one has recognized to be the truth."


I thank you, Mr. Moderator, for giving me the floor.  

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