To realize transitional justice, the “Act Governing the Handling of Ill-Gotten Properties by Political Parties and Their Affiliated Organizations” (“the Act”) was promulgated on August 10, 2016.  An “Ill-Gotten Party Assets Settlement Committee” has been established within the Executive Yuan on August 31, 2016 to uncover and deal with assets illegally or unfairly obtained by any political party established before end of the martial law period (i.e., before July 15, 1987).

According to the Act, the so-called “ill-gotten properties” refers to properties obtained by a political party or its affiliated organizations via any manner in contravention of the essential purpose of a political party or otherwise contrary to the principles of the democratic rule of law.  The Act shall also be applicable to any third party who obtained or  was transferred assets from political parties, their affiliated organizations or trustee.

It should be noted that Paragraph 1 of Article 5 and Article 9 of the Act provide that a political party’s properties existing as of August 10, 2016, or other properties no longer in existence but obtained without payment or other consideration during the period of martial law, shall be presumed to be ill-gotten properties (excluding membership dues, political contributions, donation of campaign funds, election expenses subsidies and income from such funds).  The presumed ill-gotten properties are prohibited from being transferred or disposed of, except where such transfer or disposition arises from performance of a legal duty, or is based on legitimate reasons, or is otherwise approved by the Ill-Gotten Party Assets Settlement Committee.  Since the scope of the types of properties at risk of being presumed to have been ill-gotten is wide and far-reaching, any transaction relating to ill-gotten properties might be in violation of the Act and  be at risk of being deemed invalid.

In addition, pursuant to Article 6 of the Act, any third party who obtained or was transferred ill-gotten properties from a political party, its affiliated organizations or trustee without payment or other consideration will be required to transfer within a certain time period the said properties to the state, to local self-governing organziations, or to the original owners.  However, no further details have been provided in connection with how to determine the scope and amount of the assets to be transferred by such third party, and how to determine the cash equivalent of the value of those ill-gotten properties that had been previously transferred to third parties but cannot now be returned.

In view of the broad scope of properties or assets previously obtained by political parties and their affiliated organizations that may be deemed to be “ill-gotten properties”, , and of the lack of detailed regulations in connection therewith, it would be advisable for those who engage in dealings with political parties to be aware of risks arising from the Act.