Abstract
We examine the asset tunneling where the authorities in Taiwan empower certain individuals or organizations to hold the reins of state-owned (or- influenced) enterprises (SOEs) without legitimate reasons. In the name of privatization, Taiwan government has been seeking to minimize its role in the economy by privatizing state enterprises since Year 2000. However, pursuing privatization without putting sound governance culture and system in place may not serve original intentions. This paper examines the governance system of several leading and influential SOEs in Taiwan from the perspective of both finance and law. We identify alleged ＂tunnels＂ where the transfer of state assets without monitoring mechanism is possible. Tunnelling examples are provided, structural remedies are suggested, and SOE governance is called upon academic attention.