FOLLOWING DPP INDICTMENTS, A POLICY STRUGGLE PLAYS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002178

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/24/2017
TAGS: PGOV TW
SUBJECT: FOLLOWING DPP INDICTMENTS, A POLICY STRUGGLE PLAYS
OUT OVER REPLACING PARTY CHAIRMAN


TAIPEI 00002178 001.2 OF 002


Classified By: AIT Director Stephen M. Young,
Reasons: 1.4 (b/d)


1. (C) Summary: On September 21, Vice President Annette Lu,
DPP Chairman Yu Shyi-kun, and NSC Secretary General Mark Chen
were indicted for corruption for embezzling special
allowances made available to senior officials. DPP
presidential and vice presidential candidates Frank Hsieh and
Su Tseng-chang were cleared of similar charges. Yu Shyi-kun
has announced he will step down as party chairman, but
questions remain about timing. Yu stated on September 24
that he intends to stay on through the party congress
scheduled for September 30. However, a Hsieh confidante
predicted to AIT that Yu will leave office prior to the
congress and will be succeeded by President Chen. Our
contact criticized Yu for pursuing his own agenda, including
a radical version of a "normal country resolution," in
disregard of the interests of the party's legislative and
presidential candidates. President Chen and the Hsieh camp
hope that a reorganized party apparatus will set a new,
effective campaign agenda, he added. End Summary.


2. (U) The Supreme Prosecutors Office called a press
conference Friday evening, Sept. 21 (the beginning of the
four-day Mid-Autumn holiday),to announce the indictment of
Vice President Annette Lu, DPP Chairman Yu Shyi-kun, and NSC
Secretary General Mark Chen for corruption and forgery in

SIPDIS
using fraudulent receipts to claim reimbursement from special
allowance funds made available to senior officials. DPP
presidential and vice presidential candidates Frank Hsieh and
Su Tseng-chang were cleared of similar accusations because of
lack of evidence of any wrongdoing. An irate Vice President
Lu said she would not resign and accused the prosecutors of
"trampling" on her, claiming she had not directed her staff
to submit fraudulent receipts obtained from other people as
the prosecutor charged.


3. (U) DPP Chairman Yu Shyi-kun, who was on a visit to
Canada, immediately issued a statement asserting his
innocence but saying he would resign his position as party
chairman in keeping with his previously announced commitment
that he would step down if indicted. Upon his return to
Taipei on September 24, Yu clarified that he would resign at
an "appropriate time" but intended to stay on through the DPP
party congress scheduled for September 30 to avoid a
perception that he was "evading responsibility."


4. (C) Yu's planned resignation has re-ignited a simmering
power struggle within the DPP, which has been deeply divided
between independence fundamentalists and moderates since the
presidential and legislative primaries last May. DPP advisor
and TECRO Council Member Corey Chen (protect) told AIT party
regulations mandate that Yu will definitely have to step
down. However, there is a question over timing. While DPP
Secretary General Lin Chia-long, the Deep Green and a few

SIPDIS
others are arguing Yu doesn't need to step down, at least for
now, President Chen, who has put up with Yu for too long,
will not let the situation drag on, Corey Chen maintained.
He predicted that President Chen himself will decide the
timing of Yu's departure with the issue being resolved at the
latest by this coming Saturday (Sept. 29).


5. (C) The Hsieh camp absolutely will not accept Yu's
continuing in office, Corey Chen added. While Yu and the
party headquarters should have been helping DPP Legislative
Yuan (LY) and presidential election campaigns, they have been
pursuing their own agenda at the expense of the candidates'
interests, he continued. Pointing out that Frank Hsieh will
need support from the Taiwan Solidarity Union (TSU) to win
the presidential election, Corey Chen also blamed Lin
Chia-long for causing the breakdown in coordination with the
smaller pan-Green party.


6. (C) Corey Chen said it is "almost certain" that President
Chen will resume his previous position as party chairman
(which is in accordance with the party's charter) unless
Hsieh and President Chen can find another acceptable person,
which would be difficult. Once Yu has been replaced, the
party's campaign agenda can be reset. Also, if President

TAIPEI 00002178 002.2 OF 002


Chen so decides, the party congress scheduled for Sunday
could be postponed or even canceled. The party congress is
primarily intended to be the kickoff event for LY and
presidential candidates, not as a venue for deciding party
policy as Yu has tried to make it with the "normal country
resolution."

Comment
--------------


7. (C) Yu has proven to be highly divisive as DPP chairman,
alienating President Chen, Hsieh, Su, and the entire moderate
wing of his party. Following his poor third place polling in
the DPP presidential primary this May, Yu continued and even
accelerated his championing of a radical Deep Green agenda.
Although Yu's supporters may fight for him to stay on, Yu's
critics will cite his own previous commitment to step down,
the party's regulations, and the fact that KMT candidate Ma
Ying-jeou immediately resigned his position as KMT party
chairman when he was indicted in a similar case. That Hsieh
and Su were cleared in this case will boost their campaign,
but there are further investigations targeting Hsieh and of
course other candidates as well.
YOUNG