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Taiwan wins Lafayette court case
REPARATIONS: French company Thales has been ordered to
repay about US$861 million to make up for illegal commissions which helped the
firm win the frigate deal
By Rich Chang and Ko Shu-ling
STAFF REPORTERS
Wednesday, May 05, 2010, Page 1
A frogman stands in front of two French-made
Lafayette-class frigates at the Tsoying naval base in Kaohsiung on Jan. 26.
Thales has been ordered to pay about US$861 million in compensation to Taiwan
over the frigate sale.
PHOTO: SAM YEH, AFP
The Ministry of National Defense (MND) yesterday confirmed reports that it had
won the case it filed with the international commercial arbitration court in the
scandal-plagued Lafayette frigate deal. The French company Thales has been
ordered to repay Taiwan’s government around US$861 million.
In the ruling on Monday, the Paris-based court said the money was to make up for
unauthorized commissions that had been paid to help Thomson-CSF (now known as
Thales) win a deal to sell six Lafayette frigates to Taiwan for US$2.5 billion
in 1991.
The Navy filed the arbitration petition with the court in 2001, requesting the
repayment of US$520 million in unlawful kickbacks from Thales.
Deputy Minister of National Defense Chao Shih-chang (趙世璋) told a press
conference yesterday that the ministry hoped that Thales would now repay the
money and if the company refused, the Navy would apply to the French court for
compulsory enforcement.
Navy attorney Vivian Lee (李孟融) told the press conference that the court ruled
that Thales repay US$591 million in unlawful kickbacks, US$250 million in
interest and US$20 million in legal expenses, totaling US$861 million.
The ruling was final, she said.
“Thales has been ordered to pay damages and interest,” a company spokesman said,
adding that the group was “contesting the very basis of this ruling” and would
appeal.
Under Article 18 of the contract, the French company was prohibited from paying
any kind of commission and it was stipulated that any illicit commissions would
have to be repaid to Taiwan.
The contract also said that any dispute would be settled by a panel of
arbitrators.
Prosecutor-General Huang Shih-ming (黃世銘) said Taiwanese prosecutors have not yet
completed their investigations into the Lafayette case and they would continue
to look into any involvement of former government officials and politicians in
the case.
Taiwanese investigators said Thompson-CSF paid US$495 million to Andrew Wang
(汪傳浦) and US$25 million to Alfred Sirven, a former vice chairman of the French
oil firm Elf-Aquitaine. Sirven is alleged to have played the role of money
launderer and allocator of the kickbacks in the transaction.
Wang fled Taiwan in late 1993 following the death of Navy Captain Yin Ching-feng
(尹清楓), whose body was found in the sea off the east coast of Taiwan.
Yin is believed to have been ready to blow the whistle on colleagues who had
allegedly received kickbacks from the Lafayette deal.
Wang has been wanted in connection with Yin’s death since September 2000.
A French judicial probe opened in 2001 to investigate claims that much of the
money paid by Taiwan a decade earlier went toward commissions to middlemen,
politicians and military officers in Taiwan, China and France.
In 2001, the Control Yuan ruled that as much as US$400 million in kickbacks may
have been paid over the course of the deal.
Thales spearheaded the sale, but the main stake in the contract was held by the
French state-owned shipbuilder DCN. Several sources said the French state would
have to pay 70 percent of the penalty.
President Ma Ying-jeou (馬英九) expressed gratification over the ruling.
Presidential Office Spokesman Lo Chih-chiang (羅智強) said Ma’s position on the
matter was clear and that he supported the ministry’s position that the case
should not be settled out of court.
Lo said the legal triumph strengthened the administration’s resolve to build a
clean government and military.
Lo declined to comment on whether Ma would accept an offer by the French
government to exchange the compensation for the upgrade of existing munitions or
additional weaponry, saying it was a hypothetical question.
At a press conference held by the Chinese Nationalist Party (KMT) caucus, KMT
Legislator Lin Yu-fang (林郁方) of the Foreign and National Defense Committee
described the result as “belated justice.” Lin said he the nation should receive
NT$40 billion in compensation rather than NT$20 billion as reported by the
media.
Democratic Progressive Party (DPP) legislators said the ruling showed that
military officials were also guilty in handing out and receiving kickbacks and
asked the defense ministry to publish the names of those involved.
DPP Legislator Chai Trong-rong (蔡同榮) asked the government to redouble its
efforts in tracking down escaped fugitive arms dealer Wang, the key suspect in
the kickback scandal.
Wang — who also holds a Dominican Republic passport — is ranked No. 4 on a list
of Taiwan’s most wanted.
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