Ship­build­ing exec charged with fraud

Bangkok Post - - ASIA -

TAIPEI: The chair­man of a Tai­wan ship­build­ing com­pany that won a con­tract to build six naval ships was charged in a loan fraud case on Tues­day, deal­ing a blow to the is­land’s am­bi­tion to grow its do­mes­tic de­fence in­dus­try.

Tai­wan re­lies on its main ally the US as its big­gest arms sup­plier, but Pres­i­dent Tsai Ing-wen has been push­ing to strengthen its own mil­i­tary equip­ment tech­nol­ogy and man­u­fac­tur­ing ca­pa­bil­i­ties since she came to power in May 2016.

The big­gest threat to the is­land is China, which sees Tai­wan as a break­away prov­ince to be brought back within its fold — by force if nec­es­sary.

But con­cerns have been swirling since it emerged that Ching Fu Ship­build­ing Co may have taken out loans il­le­gally af­ter it won a de­fence min­istry con­tract in Oc­to­ber 2014 to build six minesweep­ers for Tw$34.9 bil­lion (374.8 bil­lion baht).

Ching Fu chair­man Chen Ching-nan and four oth­ers, in­clud­ing his son and wife, were in­dicted by the Kaoh­si­ung District Pros­e­cu­tors Of­fice, seek­ing a jail sen­tence of 30 years for Mr Chen.

The de­fen­dants con­spired to fal­sify doc­u­ments and in­voices with off­shore com­pa­nies to ob­tain $202 mil­lion of loans, pros­e­cu­tors said in a state­ment on Tues­day.

The scan­dal hurt the im­age of the navy and caused up to Tw$13.1 bil­lion of losses for the lend­ing banks, it said.

Pros­e­cu­tors found no wrong­do­ing by the de­fence min­istry, which had dis­solved the con­tract with Ching Fu in De­cem­ber amid the probe.

“(The de­fen­dants) caused the public to ques­tion whether there was abuse in the navy’s pro­cure­ment process, and caused the navy’s ef­forts over the past 10 or so years to be wasted,” pros­e­cu­tors said.

Their ac­tions also “se­ri­ously dam­aged na­tional in­ter­ests”.

Tai­wan last year launched its first ever home-grown sub­ma­rine project.

The de­fence min­istry also an­nounced last year a new gen­er­a­tion of jet train­ers is be­ing built lo­cally, to be com­pleted by 2026.

Ms Tsai warned in De­cem­ber against what she called Beijing’s “mil­i­tary ex­pan­sion” — the in­crease in Chi­nese air and naval drills around the is­land since she took of­fice.

Beijing has cut off of­fi­cial com­mu­ni­ca­tions with Taipei as Ms Tsai re­fuses to ac­knowl­edge the self-rul­ing, demo­cratic is­land is part of “one China.”

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