Presidential Office denies alleged role in Ching Fu case

Opposition Kuomintang Legislator Ma Wen-chun speaks to reporters at the Legislative Yuan on Nov. 14, 2017. The legislator said the Presidential Office allegedly pressed the Navy to pay NT$2.4 billion to Ching Fu Shipbuilding Co. (CFS), Taiwan's largest private shipbuilder, late last year. (NOWnews)

TAIPEI (CNA) – The Presidential Office on Tuesday dismissed a report by the China Times that it used its influence to have funds transferred to a financially-troubled naval contractor, and demanded that the Taipei-based daily apologize and issue a correction.

According to the report, which was based on an audio tape obtained by opposition Kuomintang (KMT) Legislator Ma Wen-chun (馬文君), the Presidential Office allegedly pressed the Navy to pay NT$2.4 billion (US$81.12 million) to Ching Fu Shipbuilding Co. (CFS), Taiwan’s largest private shipbuilder, late last year.

The payment was for work done on a NT$34.9 billion (US$1.18 billion) contract Ching Fu won in October 2014 to build six minesweepers for Taiwan’s military. The company is under investigation after defaulting on a NT$20.5 billion syndicated loan.

In a statement issued Tuesday after the report appeared, the Presidential Office denied ever intervening in the case and said allegations of its involvement in the case and putting pressure on the military were clearly fabricated.

It said the contract to build six minesweepers for the Navy as part of a domestic warship program was awarded by the previous administration, and the MND and other agencies have carried out the project according to the law and the contract since the current government took office in May 2016.

The statement added that the Presidential Office had acted lawfully in handling all appeals by Ching Fu and had recently declassified related documents and handed them over to a legislative task force looking into the case.

In the audio tape cited by the KMT legislator and reported by the China Times, CFS Vice Chairman Chen Wei-chih (陳偉志) was holding a meeting with Kaohsiung City Marine Bureau head Wang Tuan-jen (王端仁) and Fisheries Agency research fellows on Oct. 7, 2016.

Chen was seeking help in obtaining land in a northern Kaohsiung harbor as part of the project, and he apparently was trying to impress upon Wang and others how much the central government was behind it, according to the China Times.

During the meeting, Chen said he was told by a Navy source on Sept. 27 that it did not have the NT$2.4 billion owed to his company for work on the project but that it would pay him the following March. Chen said his company could not wait for payment because sub-contractors wanted to be paid, so he went to the Presidential Office to “communicate” on the issue, and in just a few days, the Navy told him it had obtained the funds, the report said.

The Navy eventually paid Ching Fu the NT$2.4 billion on Dec. 16, 2016, leading the Ministry of National Defense (MND) to include the funds in its budget plan for this year, according to the report. In a separate statement issued Tuesday, Navy Command Headquarters said it paid Ching Fu according to the terms of the contract and did not receive any instructions from the Presidential Office or a supervisory unit with regard to the payment.

It said Ching Fu completed the third phase of the project on Sept. 27, 2016 and collected payment on Nov. 28, 2016 and Dec. 6, 2016, and not on Oct. 7 that year as stated in the China Times report. The statement urged the media to fulfill its moral and legal responsibility to refrain from influencing a judicial investigation.

Ching Fu is under investigation for defaulting on a NT$20.5 billion syndicated loan from nine domestic lenders, of which NT$15.4 billion had already been disbursed. Prosecutors suspect the company of using bogus documents to falsify four capital increases that were required as part of the terms of the loan.

By Yeh Su-ping and Evelyn Kao