TAIPEI - Headlines talking of a "towering inferno"
in homage to the eponymous 1970s movie were too hard
to resist. But the most dramatic thing about the fire
last weekend at Taipei's Eastern Science Park - actually
not a park at all but a 26-floor office complex in an
eastern suburb of the city - is the size of the losses
involved, which the Ministry of Finance estimates to
be in the region of NT$13 billion (US$395 million).
There is also the matter of face: The science park
was supposed to be representative of high-tech Taiwan
at its most creative; the stupidity that led to the
fire and the greed that resulted in its spreading
has been highly embarrassing for Taiwan.
The science park complex, consisting of three connected
tower blocks, was the home of some 236 high-tech companies
including Taiwan's most important software developers
and hardware design houses as well as offices of the
island's leading brand-name hardware manufacturer
Acer Inc.
The fire broke out at about 4 am on the third floor
of the complex's A block, in an office being used
as a Buddhist shrine. There has been speculation that
burning incense might have started the blaze, although
the shrine owners insist that incense was never burned
in the office.
Firefighters rushed to the scene and believed that
the fire had been extinguished by early evening, although
their ability to check the building was hampered by
its being locked up for the weekend. While the heavy
security measures were an obstacle to firefighters,
the fire itself had no such problems, leaping through
stairwells and ventilation ducts to the upper floors
of the building where it broke out again.
By 10 pm on Saturday night the upper floors of all
three blocks were ablaze. To compound the Taipei County
fire department's misery, while it claims to have
Asia's highest reaching elevated platform truck, at
72 meters, this just wasn't tall enough to reach beyond
the 20th story and there was little the fire department
could do except watch the top of the complex burn
itself out. Eventually the fire was pronounced out
after 500 firefighters had worked 43 hours to extinguish
it.
Those companies who had not experienced any fire
damage nevertheless found that water damage had been
almost as devastating among companies almost totally
dependent on computer systems for everything from
employment records to advanced research work.
The blaze has long-term ramifications, not only because
of the crimp it has put in the plans of many of Taiwan's
high-tech enterprises, but for two other reasons:
its fallout provided a wonderful illustration of how
the ball game is played in Taiwan, and investigations
into the reason for the fire's spreading beautifully
illustrate the impotence of local government authorities
in the face of Taiwan's politically well-connected
scofflaws.
Recrimination over the fire began before it was even
out. The first in line was the Taipei County fire
department which was accused of being slow off the
mark, exercising poor judgment in believing the fire
extinguished and negligent in allowing the fire to
spread via air ducts from A block where it stated
into the other two blocks of the complex.
What has added fuel to the rhetorical fire was that
Taipei County has been controlled by the Democratic
Progressive Party (DPP) which also controls the central
government, despite its minority status in the legislature.
With elections for both county government chiefs and
the legislature at the end of the year, it is hardly
surprising that the opposition Kuomintang (KMT) has
done its best to paint the Taipei County government
as inefficient and tried to color the central government
the same way. High-level KMT officials such as spokesman
Wang Chih-kang said that the fire was likely to push
up unemployment in already bad economic times, thereby
being able to utilize to snipe at the government's
economic record.
There has been another reason for trying in some
way to blame the government for what happened. Many
of the companies whose offices were damaged were under-insured
if they were insured at all, or had policies so highly
restricted that they cannot get compensation for such
things as water damage. Being able to pin the blame
on the fire would enable them to claim from the government
under the National Compensation Law, which provides
compensation for loss resulting from government negligence.
But as the investigation into the fire has continued
over the past few days, blame has shifted toward some
of the KMT's powerful corporate cronies and the opposition
party is trying to say as little as possible about
the fire at all for fear of "blame by association".
While the building was still burning it was pointed
out that tower blocks rely for their preservation
not so much on the aid of fire department but on their
own security systems, sprinklers, firewalls and doors
and similar measures. It has been mandatory in Taiwan
for 15 years that all buildings higher than 10 floors
have sprinkler systems installed; the science
park complex was built in 1996 to the fire safety
standards of the day.
The problem is that taking advantage of imprecision
in the law, the science park complex only had sprinklers
installed above the 10th floor. They were,
therefore, not available to cope with the initial
blaze on the third floor and by the time the fire
head leaped upward there was no electricity to the
building and the sprinklers didn't work. On top of
this the systems were known to be faulty and for this
and other reasons the complex had not passed a fire
inspection test in the past two years.
Tuntex not only built the complex but still owns
it. The inadequacies of the sprinkler system are obviously
to be laid at Tuntex's door. But the company has also
been accused of making another contribution to the
fire's spreading by removing firewalls from the upper
stories of the building. A member of the building's
management committee told local media that as soon
as Tuntex received an occupancy permit for the complex
in 1996 they moved into the top floors of all three
blocks and pulled down the fire walls that separated
them. Last Saturday this allowed the fire to jump
from block to block.
Taipei County's Public Works Bureau claims that removal
of firewalls was extensive throughout the complex
and that it had asked Tuntex to fix the problem long
ago, a request Tuntex ignored. This left the bureau
with a quandary still unsolved at the time of the
fire. because local governments have no way to force
building owners to comply with fire regulations except
to cut off their water and electricity supplies until
standards are complied with and inspection passed.
For the bureau, cutting off water and electricity
to such a big-ticket facility as the science park
complex controlled by as politically well-connected
a group as Tuntex was more likely to result in "early
retirement" for bureau officials than an improvement
in the fire safety standards at the science park.
And so the situation festered - until Saturday.
The problem is that even is Tuntex's scofflaw attitude
to fire safety was found to be a contributor to the
fire - and the company might argue that the Public
Works Bureau's lack of zeal in chasing it up played
as big a part - the company is in no position to fork
out compensation. Even before the fire, the company,
originally a textile manufacturer which expanded into
chemicals and property development, was attempting
to reschedule NT$58.1 billion worth of loans. Meanwhile
its stock has fallen by 81 percent over the past year,
twice as much as the Taiwan Stock Exchange index.
Given Tuntex's financial plight, it might be that
the government will end up as a "compensator
of last resort". This it will resist if only
because it has already attracted criticism from within
its own ranks for its zeal in persuading banks to
roll over problem loans from companies such as Tuntex.
This might have been common under the KMT's crony-ridden
rule, the critics say, but the DPP should have a more
robust attitude toward moral hazard. The problem the
DPP faces is how to prevent that stepping in, wallet
open, to get the science park up and running again
as soon as possible might involve moral hazard, but
it is the political hazard of not doing so that it
really on its mind.
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