An entry of default has been entered the second time in a year against the Kuomintang Business Management Committee by the Clerk of the U.S. District Court, Northern District.  The defaults in the case Taiwan Civil Rights Litigation Organization, et al vs. Kuomintang Business Management Committee could lead to a far-ranging outcome that extends far beyond the gold bond case.

The Taiwan Civil Rights Litigation Organization is co-plaintiff with two holding companies, Fort Night, LLD, and Pacific Sentry Associates.  Attorney Jonathan H. Levy represents the plaintiffs and explained the importance of the Kuomintang default: “The lawsuit by ROC bondholders has implications for billions of dollars of defaulted ROC debt.  The People’s Republic of China has repeatedly indicated they are not the successor to the Republic of China.  The ROC has indicated they will not deal with the debt until the issue of Mainland China is dealt with.”

Levy commented after the default entry against the KBMC:  “The Court has indicated the KMT could be responsible for the debt as a beneficiary of the debt under the theory of quasi-contract,  Thus debt defaulted on in 1939 by the KMT Republic of China government is coming home to roost.  Where will the KMT get the money–the Black Gold, that is where.”

Black Gold is a term to describe unaccounted for wealth looted from the Taiwanese and others by the Republic of China under dictator Chiang Kai-shek and his son Chiang Ching-kuo during their forty years of martial law.

“The lawsuit has wider implications,” Levy added, “The Imperial Russian debt, for example, is still in dispute.  TCRLO, which is assisting the bondholders, is not a fringe organization.  Also, former Judicial Yuan Vice President Cheng Chung-mo, a leading Taiwanese jurist has come out in favor of the lawsuit’s theory.  Likewise, former Chief Judge for the Northern District of California, Vaughn Walker, who presided over the initial stages of the case, suggested under certain circumstances it is entirely plausible the KMT may be held responsible.”

The lawsuit was first filed January 25, 2010, but was delayed after the appearance of an “officious intermeddler” who claimed to represent the Kuomintang defendants.  The case was reassigned and all pending motions were terminated.  The complaint was amended and the intermeddler was drummed out of the case.

Jonathan Levy explained what happened next: “The KMT’s Overseas Director was personally served in April in Los Angeles.  The KMT has not responded and been held in default”

“Expected damages will be in the millions as Plaintiffs represent the largest known group of Chinese bondholders in the world,” said Levy.  “The value of the bonds has increased in recent months on rumors of the lawsuit’s outcome.”

Levy said, “The failure of the KMT to respond may be related to the upcoming ROC election cycle and its unwillingness to deal with the Black Gold issue while continuing to imprison Chen Shui-bian.”

Chen Shui-bian, the imprisoned former president of the Republic of China in-exile, is jailed on corruption charges stemming from his purported misuse of political funds.   In an exclusive prison interview Chen told the EXAMINER that he had done nothing that both his predecessor Lee Teng-hui and successor Ma Ying-jeou were not equally guilty of doing.  Chen’s trial and imprisonment have been a source of embarrassment to the exiled Chinese government controlling Taiwan.

The Republic of China in-exile was imposed on Taiwan following World War II by the United States to provide Chiang Kai-shek a safe haven from the Communist revolution that drove him from China.

John Hsieh, chairman of Taiwan Civil Rights Litigation Organization, explained his organization’s role in the case:  “The purpose of the lawsuit is to secure justice in United States courts for the ROC bondholders.  Because neither the exiled ROC government in Taipei or the PRC government in Beijing are willing to pay these defaulted bonds, decades old, due process of law has not been done.”

Hsieh said, “The KMT took the profit from the defaulted bonds and bought properties and a rum business in the United States   They own property in San Francisco, New York, Los Angeles, Chicago, Houston, etc….almost every major metropolis of the United States.  They enjoyed the Black Gold but the bondholders suffered.”

“Now many U.S. citizens own the Chinese gold bonds and are looking for justice in American courts denied them in ROC courts,” said Hsieh.  “We believe the bondholders are entitled to justice and the rule of law.” – Examiner