Taiwan’s Own ‘Dynasty’ Scandal Rivets Nation : Asia: Industrial heir’s affair sullies a top university’s reputation and sends corporation’s stock plummeting.

It started as a textbook affair. Then it became a family affair. Finally it was a corporate affair.

When it was all over, a top university’s reputation had been sullied. Taiwan’s leading industrial group had taken a dive on the stock market. And Winston Wang, 44-year-old heir to an industrial empire, was on an airplane to America to serve a year of penitence for bringing public disgrace on his prominent family.

For three months, Taiwan was riveted by the unfolding drama of the island’s own private “Dynasty” plot, complete with warring wives and a succession struggle. Seldom before in Taiwan had the country’s preoccupation with economic power, sex and higher education converged in such a public way.

“If there had been just a sex scandal,” said Chiu Hei-yuan, a sociologist at National Taiwan University, “I don’t think it would have been much of a story. But it touched on the reputation of our most famous school, and people had the impression that there was a power struggle in the country’s biggest company.”

Taiwanese are not generally prudish about sex. Among the most eye-catching businesses in the capital are several hundred glitzy “barbershops” that are, in fact, openly operating houses of prostitution. Some older-generation, wealthy Taiwanese continue the Chinese tradition of concubinage and polygamy.

But they are very particular about the quality and integrity of their educational system, especially National Taiwan University, whose graduates make up the island’s ruling class.

The public airing of the Wang scandal began in September, when Annie Lu, a 27-year-old graduate student, accused the chairman of her academic review committee of flunking her out of a doctoral program because she refused his sexual advances. Huang Ming-chou, a business professor, denied the sexual harassment charges against him but countered with a sensational accusation of his own.

During the review of Lu’s Ph.D. candidacy, he said, he received a telephone call from another university professor, Winston Wang, trying to influence his decision. Moreover, he charged, Lu and Wang, who is married, were having an affair.

On the surface, this would seem a fairly common, if tawdry, academic plot: Middle-aged married professor. Beautiful, academically ambitious student. Romance. Exposure. The End. What gave the story shelf life was that the professor was also the eldest son of one of Taiwan’s richest and most influential men, 80-year-old Formosa Plastics magnate Y. C. Wang.

Lu, a former fortuneteller’s assistant from a Taipei family of modest means, went to Taiwan’s Business Weekly magazine with her story. She said Winston Wang was her “one and only lover.” She told another publication that she had written Wang’s powerful father asking his permission to be accepted into the family as a concubine.

In the past, these kinds of stories had limited exposure in Taiwan, restricted mainly to the tabloid press. This time, however, the mainstream press picked up the trail, justifying its interest on the grounds that the story had institutional and commercial implications.

“Our basic attitude,” said Huang Hung-jen, Business Weekly’s editor, “was that if this was just a love affair, it’s no problem. But if it involves the resources and reputation of a public company, then it becomes something else. We felt general public interest was involved.”

Moreover, in Taiwan’s freewheeling cable television market, the talk shows were having a field day. One cable station, TVBS, scored a scoop by managing to get both Lu and the man she accused of sexually harassing her, Prof. Huang, on the same panel.

Business Weekly’s Huang said one woman came into his office and offered more than $1 million “to shut Annie Lu up.”

Newspapers reported that the elder Wang’s three wives and their offspring all jumped into the fray. This caused stock market speculators to worry that Formosa Plastics--a $5-billion-a-year business--was involved in a family succession feud. Formosa Plastics stock tumbled, losing almost $2 billion in value over a two-month period.

The corporation, which produces plastic raw materials and a range of computer equipment, was finally forced to deal with the scandal.

Winston Wang was suspended for a year from his position as senior vice president of Formosa subsidiary Nan Ya Corp. A company statement was issued stating that the younger Wang “failed to manage the case properly and caused troubles for the Formosa Plastics Corp.”

With three wives, including one whom he met in a hostess club, Y. C. Wang was probably not shocked by his son’s affair. But he was reportedly angry that the son had allowed his sexual relations to affect the family business.

Before leaving for the United States, Winston Wang issued a contrite statement: “I did not expect the ripples that had surfaced from the claims made against Taiwan National University and from my relationship with Annie Lu. I learned a big lesson myself, but it had already hurt my most respected father and mother. I apologize.”