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Paris court rules in
favor of Taiwan
LAFAYETTE CASE: France and defense contractor
Thales said they would pay Taiwan a fine after a Paris court threw out their
appeal of an arbitration court ruling last year
Staff Writer, with CNA
France and defense giant Thales announced they would pay Taiwan a court-ordered
fine of 630 million euros (US$913 million) after losing an appeal against the
payment awarded by an international court of arbitration in May last year.
The French government said on Thursday it has agreed with a request by Thales,
the French contractor that sold six Lafayette frigates to Taiwan in 1991 when it
was known as Thomson-CSF, not to appeal the ruling by the Paris Court of
Appeals.
The Ministry of National Defense (MND) said yesterday that it was pleased with
the French court ruling rejecting the appeal by Thales against payment of
damages to Taiwan for a scandal-plagued warship deal struck in August 1991.
Acknowledging the court victory in a statement, the ministry said the decision
by the French government and Thales to pay the court-ordered fine ¡§upheld
Taiwan¡¦s interests,¡¨ adding that together with other government agencies,
including the Ministry of Foreign Affairs and the Ministry of Justice, the MND
would work to ensure that the ruling was carried out, including reparations for
interest payments, legal fees and arbitration costs.
The ruling is expected to bring an end to a nearly two-decade dispute between
Taiwan and France over commissions and kickbacks paid on the US$2.8 billion
deal.
The MND said in the statement that the dispute arose from the French
contractor¡¦s violation of a contract provision that prohibited the payment of
bribes or commissions in the deal.
To defend Taiwan¡¦s interests, the MND said, it authorized the naval command
headquarters to file an application with the International Court of Arbitration
under the International Chamber of Commerce (ICC) on Aug. 22, 2001, to demand
damages from Thales.
On May 3 last year, the ICC arbitration court ruled that Thales had to pay a
penalty of US$591 million plus interest, litigation fees and other related
expenses for violating Article 18 of the contract, known as ¡§Bravo¡¨ in France,
which required that there be no payment of commissions.
Because the French government guaranteed the contract, it was to pay 72.5
percent of the penalty, with Thales to pay the remaining portion.
The French government said on Thursday that an emergency amendment to its
operating budget would have to be sent to parliament in order to pay the fine
and settle the issue.
Thales said in a statement it had already set aside provisions for its 27.46
percent share of the fine and that it did not expect the ruling to hurt the
company¡¦s finances.
The French government also promised on Thursday to help Taiwan reclaim illegal
commissions paid to intermediaries, but it remains to be seen what kind of
assistance it would actually be able to provide.
The French authorities had previously classified documents relating to the
Lafayette deal as national secrets, making it impossible for judicial
authorities to trace the destinations of illegal payments, forcing the presiding
judge to eventually close the case in 2008.
Millions of dollars in kickbacks are believed to be held in Swiss bank accounts
by Thomson-CSF¡¦s agent at the time, Andrew Wang (¨L¶Ç®ú), and have become the
priority target of Taiwan¡¦s drive to repatriate the money.
However, the funds in Wang¡¦s accounts have remained frozen, pending the ongoing
litigation.
Wang fled Taiwan following the death of navy Captain Yin Ching-feng (¤¨²M·¬), which
occurred under suspicious circumstances in late 1993. Yin is believed to have
been poised to blow the whistle on colleagues who had allegedly been receiving
kickbacks from the frigate deal. Wang has been wanted by Taiwanese authorities
on a murder charge since September 2000.
Meanwhile, Prosecutor-General Huang Shyh-ming (¶À¥@»Ê) said yesterday that in
addition to claiming damages, Taiwan¡¦s judicial authorities will continue their
efforts to retrieve the illegal commissions with the legal assistance of various
countries, including Switzerland and France.
ADDITIONAL REPORTING BY VINCENT Y. CHAO
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