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Exclusive Interview

Nita Ing Bows Out

Nita Ing Bows Out

Source:Ming-Tang Huang

"We were too naive," Nita Ing says of her ill-starred relations with the government, speaking frankly before stepping down after 11 years at the helm of Taiwan High Speed Rail Corporation.

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Nita Ing Bows Out

By Yin-chuen Wu, Yi-Shan Chen
From CommonWealth Magazine (vol. 431 )

The board of financially troubled Taiwan High Speed Rail Corporation (THSRC) accepted chairwoman Nita Ing's resignation on Sept. 22 after she had led the company for 11 years. The company narrowed its net loss to NT$2.7 billion in the first half of 2009 from NT$11 billion over the same period a year earlier because of lower interest expenses and an adjusted depreciation schedule. But it remains mired in debt, and passenger traffic has failed to reach the heights predicted when the project was first conceived in the late 1990s. Prosecutors are even looking into allegations of irregularities related to the BOT (build-operate-transfer) project's transfer of losses to national coffers and its handling of its eight stations and surrounding land. In this exclusive interview with CommonWealth Magazine, Ing gives the inside story behind the company's financial difficulties and the chain of events that led her to step down.


Q: Do you feel you were deceived during the process that led to your resignation? Throughout the whole process, did you misjudge anything?

A: If any of us felt we were deceived – and I want to say that I never said that directly to the media – I think it could be in two areas.

First: Passenger traffic. Passenger traffic today is only a third of what was estimated at the time when the project was tendered. A man whose relationship with the high speed railway is relatively close – I won't say his name – participated in the project and says that the government indeed inflated the estimates to make the railway more attractive to investors. It's not as if we just became aware of this today, so we can't say we were deceived, and bringing this up now will not help the situation. All we can say is that we were too naive at the time.

Q: What else did you misjudge?

A: We misjudged the government's trustworthiness and consistency. We were not wise enough. At the time, members of the older generation like CEO Tsai Wan-tsai (founder of the Fubon Group) and CEO Chang Yung-fa (founder of the Evergreen Group) were wiser. They didn't feel the government was a partner that could be counted on.

We also misjudged something else – the maturity of Taiwanese society. It proved impossible to operate a private BOT. Maybe our judgment was off because of our lack of experience.

Government the Biggest Risk

Our biggest risk was the government. I'm not referring to any one individual or agency within the government but to the government as a whole. To me, the government includes its five branches and the Office of the President – including the Legislative Yuan. We did not foresee then that the situation would become as complicated as it is today.

Our original shareholders invested in the project based on a package of incentives that lured them on board. Later, the government said it was unable to help, because such assistance would constitute graft.

My strongest feeling is that we are still here even though we've had three presidents and changed the premier and ministers many times. Of course, after tomorrow, I won't be the chairwoman of THSRC anymore.

Every time a key official was changed, we had to once again brief him on the railway's progress and then wait for hundreds of days before he actually familiarized himself with the situation. Once he got up to speed on the railway, we still had to see if he remained in his post and how long he himself felt he would be in his position. If he thought he had only three months left in office, he would brush me off, because he wasn't willing to assume the political responsibility.

The Depreciation Curse

Q: The high speed railway now faces serious problems with depreciation and the concession period. Were these not anticipated at the beginning?

A: We thought at the time that the operating period could have been longer but still felt it was okay as contracted. We believed that as long as there was a reasonable operating environment, we would turn over the assets to the government after 35 years but that this high speed railway company could continue to exist.

We were in fact quite optimistic at the time. Part of our optimism was based on government estimates of passenger traffic, and part of it was that 12 years ago, Taiwan's companies had not yet moved out of Taiwan in such massive numbers. Over the past 12 years, Taiwan may have lost almost 2 million working people. Some people say the high speed railway killed the domestic aviation sector, but in fact, the domestic aviation sector was not killed by the high speed railway but by the massive exodus of industry abroad, and that exodus also killed the high speed railway.

Also, at that time, we did not place much hope in the development of areas near the stations or expect them to immediately generate benefits. We thought, however, that the government, after having appropriated 300 hectares of land near high speed rail stations, would map out development plans as we were building the line. But today, if you take a look at the area around the Taoyuan station, you'll see it's deserted. On the other hand, some legislators who don't understand the situation have accused us of engaging in land speculation. But that isn't us. The government is by far the biggest landowner.

I'm not out to curse the government. It's just that every time I felt it should solve problems as a partner, it took the stance of a regulatory agency. The government has two hats, but it's never willing to wear its "partner" hat.

Q: In looking at the existing situation, could we describe it as a successful high-speed railway but a failed BOT project?

A: I would say that from the beginning it was... I think that to call it a "failure" is inadequate. There simply wasn't any foundation of social maturity at the time to undertake this project. Taiwanese society today has been brainwashed into thinking that the government and the private sector will inevitably collude with each other, and that officials are corrupt and businessmen are villains. In fact, these stereotypes have already become ingrained. How can you fight them? As long as anybody – people who don't have to shoulder any responsibility – make accusations of collusion, partnerships (between government and business) become impossible.

Q: It never seemed to work like a BOT project, so it's hard to say whether it succeeded or failed?

A: That's true. You can't really say whether it's a failed BOT, or a failed high speed rail (laughs). At least what gives a clear conscience more than anything else is that we did get it built.

Heroes and Villains

Q: Why have you decided to step down? What really happened in your discussions with the government?

A: February was indeed an important turning point. Our board approved two plans to present to the minister (Minister of Transportation and Communications Mao Chi-kuo).

One was for the government to convert all publicly owned preferred shares into common shares so that the government would be the biggest shareholder. The second option was for THSRC to turn the company's assets over to the government because it would not have to account for depreciation. Also, with the assets in the government's hands, banks would have a different attitude. They would lend money to the government at lower interest rates and over longer periods. We would then make the interest payments, similar to the model used by the Taipei Rapid Transit System. Doing that would save us more than NT$20 billion a year in interest expenses and depreciation and amortization.

I'm not sure what concerns the minister had, but we thought the proposal was extremely creative and we also believed it took into consideration political issues.

I told the minister rather frankly that I hoped the government would not think about the issue in a self-serving way. For the politicians, it was best to not get involved. I can have meetings with you every day, but I'll wait until the company goes bankrupt or has to restructure. And then I (the government) will step in and rescue it, and become the hero to the applause of the people. And the THSRC executives will be seen as the villains who hollowed out the company. I asked the minister, please don't think about it with those kinds of schemes in mind.

Later, Minister Mao got together with me and some other board directors at the Taipei International Convention Center and said he hoped that we would trust him, that he hoped the high speed railway would continue to operate and  would remain in the hands of a private company because it had come a long way to reach its current status. He said he didn't want to see any changes.

Q: When was that?

A: March 17. That's my birthday, so I remember it clearly. None of them even wished me a happy birthday (laughs).

On April 5 he got together with us again. I forget where we held the meeting. He proposed a four-step "High Speed Railway Debt Restructuring Plan." Since then we held many, many cross-agency "High Speed Railway Debt Restructuring Task Force" meetings, but after attending a few meetings, I became even more convinced that we were just wasting time, that it was really a waste of time. I felt that we had already reached the point where even Minister Mao couldn't take it anymore. We all knew there was the possibility that we might not be able to go on.

Ing Gets the Ax

On August 24, he (Mao) called me to the Ministry of Transportation and Communications. He would not tell me directly (that I should step down). Instead, he showed me something and said to me, "You know that in the past I've always said we have to be accountable to the Legislative Yuan. Now we have been reprimanded by the Control Yuan. " The key complaint is that the 37-percent equity stake held by the public sector exceeds the 28 percent held by the five major shareholders, but the government does not have proportionate representation on the board.

Q: Was he hinting that he wanted to shake up the board of directors?

A: Yes. It was very clear! Basically, I also clearly understood that to them, I was probably not somebody who was easy to deal with. So when he said that to me, I understood what he meant. I told the minister that actually I had completed the first phase (of the company's development), which was to complete the railway's construction, and it was time for me to step down. The problem was that nobody was willing to assume the post.

Two to three days later, he sent a message through another director, saying that he was too embarrassed to tell me in person. He basically laid down a few steps. He hoped that I would first step down and then appoint a chairman representing the publicly held shares. I wasn't very surprised when I heard this, because it was the first condition for any restructuring of the board of directors.

After getting this message on Aug. 28, I arranged another meeting with the minister. He told me he hoped we would not hold a shareholders' meeting, but rather that the private shareholders would support the ascension of a government appointee. But I told him that I definitely had to convene a board meeting to discuss the subject. I also made it clear that I had no intention of staying on, especially under these circumstances.

The minister said that only by announcing publicly that the government will take control would new bank loans to THSRC not be seen as acts of corruption. That would also prevent the Control Yuan from censuring the administration. In other words, in facing the Legislative Yuan, in facing the Control Yuan, the government was unable to support the high speed railway if it remained under the control of private shareholders. The government wanted the high speed railway to survive, but not when it's in your (the private sector's) hands.

Up to now, I have not said any of this publicly. So as of today, we are saying this publicly for the first time, and once we've said it, I will not repeat it. No matter what, the high speed railway is a form of public transportation with more than 3,000 employees. What's the point of having everybody go through ups and downs? I don't think it's necessary. I also feel... in any case, I'm going to resign.

Q: Why resign?

A: The minister was clear. The condition was, you (Ing) have to step down first.

In the past few days, two board directors who have both served in government called me to say that this is how the government plays the game. But from the time we began participating in the tender, I never felt I had to experience this. I don't need to become a pawn in your game, and I refuse to be a pawn in your game.

I had to become a part of the government's game at the time because we made a promise. At least in the first phase, I kept my promise, and I feel we built the system well. We have also had some respectable operating results. Taiwan High Speed Rail Corporation is like every other company – it's impossible to be trouble-free. If any company today dares to stand up and say it doesn't have any problems, I'll cut my head off and give it to you. It's not possible.

Q: Why did those directors who supported you not want to see you leave?

A: I think part of it is that they said the manipulative hand of politics will reach into the high speed railway. After having... I can't tell you how many people we offended from the south to the north. Out of concern for me, one director told me, "You have too many enemies. You will always be a target here." From the time the project began, we have never given anything to any elected official.

Q: Many people are curious. Weren't you a strong supporter of the Democratic Progressive Party government? Many heads of companies (who supported the DPP) have been implicated in scandals, but you have not. Why not?

A: Yes. At the time I supported Chen Shui-bian, because I felt a change in political power would be a good thing for Taiwan. I didn't have any problems because I didn't get too close.

Second, I've always maintained a fine balance in that regard. Our company has never made political donations. Of course, I've supported certain legislators, and I supported the president, but only at specific times.

I haven't been implicated, because I never got too close to his family, because that's just not the way I do things. I have been to the Presidential Office, and in Chen's eight years in office, I had dinner at his home once and went to visit him around Chinese New Year. I only visited two or three times. At the wedding (Note: former president Chen Shui-bian held large-scale wedding banquets for his daughter and son, who were both married during his term in office), I gave a pair of earrings worth under NT$100,000, which I thought was an appropriate gift. And for that, I was called a foreigner. Sometimes, being a foreigner has its advantages. I of course knew that at the time there was a so-called "market price," but I wasn't willing to pay! I wondered why I should, because I wasn't in any way obligated to the president.  

Since my father founded Continental Engineering, the company has never gotten involved with the government. It's something we don't do. Continental Engineering has survived for so long because whenever there's a project in which a political figure is involved, we don't go after it, as was the case with the second terminal of the Taoyuan International Airport, where we got out at the very end. Our principle is that we like to sleep very peacefully at night.

Q: Have you been able to keep THSRC free of political interference and other forms of influence-peddling?

A: The banks monitor our company's financial transactions very closely. This account (to feed money to politicians) did not exist, and there is no way I would have taken money from my own pocket to do this. It's impossible.

Q: In terms of politics, have you ever felt that it would have been better if you hadn't stood out so much at the time?

A: I have no regrets. At the time when I got involved, I was actually to some extent pushed into it... I don't feel there's anything worth regretting. It's an experience to learn from!

My grandfather once told my father that the Ing family must always steer clear of politics. I can now better appreciate why he said that.

Q: In the future after THSRC becomes a state-run company, will it be easy for political forces to get in?

A: I don't want to comment on that, because if I do, I'll be pigeonholed. From certain angles, I feel that of course it will be easier. The real question, however, is whether Taiwan has the social environment that will enable everybody to see things clearly, or will we prefer to simplify everything into a few headlines that everyone can understand, and explain away the problem? I think that right now, Taiwanese society will opt for the latter, because confronting the actual situation is simply too complicated.

Translated from the Chinese by Luke Sabatier

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