Rumor: As a Victim, Tzu Chi Must Clarify How and Why It Was Scammed

Reports have emerged that the Tzu Chi Foundation was defrauded of 1.06 billion NTD while attempting to purchase vaccines—an incident whose entire course, from start to aftermath, appears highly bizarre. From a corporate perspective, Tzu Chi’s 'corporate governance' clearly suffered a major breakdown.

In 2021, amid a severe domestic outbreak of COVID-19 and a critical shortage of vaccines, Tzu Chi sought to procure vaccines for the public. During this process, a man surnamed Chen claimed to have access to supply channels. Tzu Chi paid him 1.06 billion NTD as a 'commission fee.' However, no procurement followed. Ultimately, Tzu Chi successfully obtained vaccines—but entirely independent of Mr. Chen.

Afterward, Tzu Chi did not file charges against the lawyer. Only recently, during an investigation into unrelated cases, did prosecutors uncover the financial trail, bringing the fraud to light.

Tzu Chi is Taiwan’s largest and most influential charitable organization. Whenever disasters strike, Tzu Chi volunteers rush into affected areas, organizing aid systematically for victims and communities. This relief system even extends overseas, deeply embedding Tzu Chi’s core mission and expertise in charitable work within the public consciousness.

Beyond this charitable image, Tzu Chi is also a massive organization with substantial assets and enterprises. At one point, media outlets analyzing Taiwan’s business groups included Tzu Chi as a 'conglomerate.'

And indeed, Tzu Chi lives up to this status: it operates nearly ten hospitals; its education system spans universities, high schools, elementary schools, and kindergartens; it runs a television station, publishing ventures, and charitable-educational centers scattered nationwide. According to unofficial estimates, Tzu Chi’s net assets exceed 150 billion NTD, with some estimates reaching around 250 billion NTD.

For an organization managing such vast operations and numerous enterprises, Tzu Chi should possess professional legal and financial departments, with deep knowledge of fundamental legal and financial operations and risk management. Yet its actions in this 'vaccine fraud case' are baffling—violating basic operational principles at nearly every step.

For example, when dealing with someone claiming to facilitate vaccine procurement, Tzu Chi’s first step should have been to verify their credibility. The fraudster claimed, 'I helped companies like TSMC and Foxconn procure vaccines,' and 'Guo Tai-ming asked me too,' statements easily verifiable with a single phone call. Yet Tzu Chi believed the fraudster solely on verbal assurance, demanding no proof—such as a commitment letter from a vaccine manufacturer—and proceeded to make the payment. This is astonishing.

Even assuming the individual truly had procurement capabilities, Tzu Chi’s act of directly transferring 1.06 billion NTD is almost unprecedented. First, regarding the amount: many initially assume this was the cost of purchasing vaccines, later stolen by the fraudster. But according to prosecutors, this sum was a 'commission fee'—not including the vaccine cost or cold-chain logistics. In other words, 1.06 billion NTD was merely an 'intermediary fee.'

Considering Tzu Chi ultimately spent 3.2 billion NTD on vaccine procurement, this intermediary fee amounted to 33%. Frankly, even without specialized expertise, anyone should recognize this rate far exceeds normal market levels—it’s absurdly high. Even under urgent circumstances and extreme procurement difficulty, suspicion should have arisen, prompting further verification. Given that Tzu Chi’s board includes numerous corporate executives, consulting experts should not have been difficult.

Even if we concede—hypothetically—that the individual genuinely had procurement abilities and deserved such high compensation, the payment method remains unreasonable. Normally, inter-corporate transactions involve negotiated contracts with staged payments—clearly defining how much is paid at each milestone. Under no circumstances would a company transfer 1.06 billion NTD upfront, without seeing any tangible goods or evidence proving successful procurement. It’s akin to buying a bowl of noodles on the street—paying the vendor before receiving the food—utterly childish and nonsensical.

Finally, after confirming the fraud, standard procedure would involve filing charges, preserving evidence, and recovering funds. Yet, over five years later, Tzu Chi remains 'unfazed' about losing 1.06 billion NTD—a stance most perplexing to outsiders. Is it because Tzu Chi lacks sufficient evidence to sue? (Unlikely, given the clear financial trail.) Or does management consider 1.06 billion NTD 'small change,' not worth wasting judicial resources over? Or is someone shielding the perpetrator? Could there even be collusion?

Furthermore, how this loss was accounted for in financial reports raises additional concerns.

Corporations—especially publicly listed ones—must answer to shareholders and investors. Violating corporate governance principles or failing in 'the duty of a prudent manager' resulting in losses or fraud constitutes dereliction of duty, allowing investors to sue management.

Tzu Chi is not a listed company and seemingly bears no responsibility to investors. Moreover, religious organizations fall outside the scope of the Foundation Act. But viewed differently, Tzu Chi’s growth and success rely entirely on donors’ generosity. Even without formal 'corporate governance' obligations, the foundation’s financial internal controls should uphold higher standards for its vast donor base. While Tzu Chi is a fraud victim, it must still explain to all benefactors why and how it was deceived, and how it handled the aftermath. This is also an accountability to itself. Only through such transparency can it sustain social trust.