Sean Lien and his father Lien Chan have always maintained that their family’s good fortunes has nothing to do with the fact that since coming back to Taiwan, all 3 generations have been government officials (well, at least trying to hit all 3). They denied the fact that Sean Lien’s grandfather was in charge of land reforms in the Taiwan Provincial Chief Executive Government (臺灣省行政長官公署) had anything to do with it. Lien family’s official claim is that Lien Chan’s mother, Mrs. Zhao Lankuen (趙蘭坤), was so good at investing, after taking a loan, she bought several real estates around Taipei, and put them up for rent. The wealth just accumulated via Mrs. Zhao’s talent in investments.
Here’s an interesting article that examines this claim by doing some math:
ptt.cc/bbs/Gossiping/M.1408 … A.AD0.html
My rough translation goes:
In the 1989 tax data released by Lien for election purposes, Lien has 6 pieces of land, totalled at 20,250 ping, valued around 20 billion NTD. In the next 10 years, the average rate of return of Lien family’s investing is over 20%, that’s according to Lien Chan himself. Before even taking compound interest into consideration, Lien family is doubling their money every 5 years.
But let’s put aside how the legendary Mrs. Chao were putting up Warren Buffett like numbers. From 1945, the year Sean Lien’s grandfather arrived back in Taiwan, to 1986, the year Sean Lien’s grandfather past away, that a good 41 year. If Lien family makes a 20% return annually, in 41 years that would be 820%. Since Lien Chan inherited 20 billion NTD, simple math would tell us that, 20 billion / 820 %, would mean in 1945, Mrs. Chao and the Lien family started out with a capital of 2,439,000,000 (2.4 billion) NTD.
Even if the Lien family somehow got insane compound interest, and Mrs. Chao makes 20% return annually for 41 years, meaning Lien’s family worth increased 1,763 times over 41 years, Mrs. Chao would still have started with an initial capital of 11.34 million NTD. The monthly salary of a teacher in Taiwan back in 1945 is 35 NTD, very high ranking public officials makes about 150 NTD. 11.34 million NTD would still be an ridiculous amount of money. Lien family claimed Mrs Chao sold 3 akkers (甲) of farmland and took out loans as their initial capital. However, in 1945, 3 akkers of farmland is unlikely to worth more than 100,000 NTD.
Lien’s family also repeated claimed by the time Sean Lien’s grandpa, Zhendong, returned to Taiwan, the Lien family is basically broke. Sean Lien’s great grandfather apologized to Zhendong for not being able to leave him with anything. So even with loans, how did Mrs. Chao get an initial capital of 2.4 billion NTD, a ridiculous amount of money in 1945?
The author gave several possibilities, I’ll list a the more plausible ones:
Using his position on several land reform committees, Lien Zhendong managed to turn previously Japanese government/NGO/private property into his own. THere were people doing that, the one who got caught was the 1946 Jiayi Chemicals case, where some official tried to bag 300,000 worth of property.
The inflation between 1945 to 1949 forced many people to drop their properties inexchange for materials. Between 1945 and 1949, the old TD’s value dropped 40,000 times. The corruption of the KMT government, 228 and forcing civilians to exchange gold for Jinyuanjuan have all contributed to this. When NTD came out, the exchange rate was 1 NTD for 40,000 TD. Money worthed less than trash. People could only depend on exchanging of goods. With Lien Zhendong’s position in the provincial government, he might have control over certain materials and exchanged them for economic resources such as land.
They borrowed it. Mrs. Chao would have bought the land, rent it out, and afterwards go to the bank to get a second mortgage. Using the borrowed money and buy new real estate and stocks, and make money on the compound interest. If they loaned 100,000 from the bank, and bought a lot of real estates around 1945, by 1949 when the value of the TD had dropped 40,000 times, from the perspective of buying power, the Lien family only paid the 1945 equivalent amount of 2.5 TD. In exchange, the land that Lien’s family bought with their mortgage would have lost relatively little value. This would be legal back then, and leveraged human disaster to make a profit, it would also require Lien Zhendong’s economic degree and high ranking public position (great relations with the banks) to pull off.
Leveraging the information Lien Zhendong would get from his position. Lien family’s wealth mostly were gained through real estates. Lien Zhendong was a member of the land reform committee (the only one with Taiwanese background.) Lien Zhendong could have clued his wife into which real estate to invest. Lien’s family would often purchase farm lands as “independent farmers” even though for 4 generations no one in the Lien family has ever worked the farm. Many of those farmlands were allowed to be rezoned when Lien Zhendong was the Minister of Interior.
Lien Chan possibly didn’t pay any inheritance tax. Many sources point out that when Lien Zhendong passed away, Lien Chan didn’t pay any inheritance tax, which was 50% back then. In 1983, Lien family was taxed around 50 million NTD. They were ranked No.16. among the tax payers. That means Lien family makes over 100 million annually. Lien Chan inherited 20 billion NTD in 1986, regardless of whether or not he paid the inheritance tax, as a public official, he should make clear how much inheritance tax he paid. If Lien family set up foundations or hedge funds or trusts to avoid taxes, that should be made clear to the voters.
I think it’s probably a combination of all of these. No. 3 is probably why they excelled above and beyond any other KMT officials in terms of accumulating wealth.