Gov’t to demand French frigate maker return NT$900 million

Hsieh Kuo-lien, The China Post

Taiwan Ministry of National Defense is expected to demand a French arms supplier return NT$900 million to Taiwan as the firm had used the money, part of a payment for six French-made warships purchased by Taiwan, as kickbacks. The Control Yuan, Taiwan’s highest watchdog body, said that according to a clause in the contract of the six Lafayette missile frigates, the French arms supplier Thomson-CSF should not have offered kickbacks to any individual or company in the 1991 deal. However, according to the officials, the French firm breached the “no-kickbacks” clause and used the NT$900 million, 1 percent of the price Taiwan paid on the deal, as kickbacks. The officials said the French firm offered the huge bribe to an unidentified amount of brokers or Taiwan officials, who are believed to have helped channel the firm to the government contract. The clause says as long as the French arms supplier used a part of the money paid by Taiwan as kickbacks, the firm must return the same amount to Taiwan for failing to observe the clause. The Control Yuan yesterday officially requested the ROC Defense Ministry to quickly file a lawsuit in a Paris district court against the French firm, in order to obtain the money quickly. The ministry is expected to sue the Thomson-CSF under the name of China Shipbuilding Corp., because it was the Taipei-based shipbuilder rather than the defense ministry that signed the contract for the Taiwan government. Meanwhile, Joel Bucher, former executive of the French bank Societe Generale’s Taipei office, arrived in Taipei yesterday morning to help Taiwan law enforcement officials investigate the case. Bucher, who is familiar with the key secrets of the corruption scandal, is believed to possess the account books which would implicate both parties in the scandal. As soon as Bucher arrived at Chiang Kai-shek International Airport, he was rushed to a reception center of the Investigation Bureau where he was afforded tight security. Both State Public Prosecutor General Lu Ren-fa and the Investigation Bureau Director Wang Kuang-ru held a meeting with Bucher yesterday afternoon. Neither offered to comment on the scandal, but Lu told reporters that “Bucher has substantiated that there were kickbacks in the case.” Although it was the first time that Lu confirmed the existence of the kickbacks, he declined to make public the names of those who had taken money under the table. Bucher reportedly told a French court last January some 800 million francs were returned to Taiwan as kickbacks. He worked for the French bank’s Taipei office, which was in charge of the payment of the deal between 1986 and 1992.

Earlier this month, the Taipei District Prosecutors’ Office indicted six former Taiwan Navy officers, including two top officers, on malpractice and corruption charges involving the case of the Lafayette warships. The six Navy officers were charged with bringing a huge amount of profits to the Thomson-CSF by abusing their authority in hugely inflating the prices in the 1991 deal. Those accused include former vice-admiral Lei Hsueh-ming, former rear-admiral Yao Neng-chun, three captains and one commander. Taiwan’s government paid US$650 million more than it should have in the deal mounting to more than US$2.7 billion, the district prosecutors said.