Many questions remain about Tuntex's dealings

The Council for Economic Plan-ning and Development said last week that political donations from former Tuntex Group (東帝士集團) chairman Chen Yu-hao (陳由豪) to the nation's three major political parties were designed to sway

decision-making over a power plant contract.

The government's accusation -- which followed the fugitive tycoon's announcement that President Chen Shui-bian (陳水扁) and his administration received political donations from him -- came as the Taiwan Financial Asset Service Corp (TFASC, 台灣金服) planned to sell part of Tuntex Group's collateralized equities in an auction scheduled for today.

While Tuntex's bid for the contract to supply liquid natural gas (LNG) to the Taiwan Power Co's (Taipower, 台電) 4,000-megawatt thermal power plant in Tatan, Taoyuan was finally defeated last year, observers said the firm had had tacit approval from the former Chinese Nationalist Party (KMT) government. Foreign companies accused Tuntex of cheating because it had gotten such an early start that other bidders had a hard time catching up.

Tung Ting Gas Corp (東鼎液化瓦斯興業), a Tuntex subsidiary whose shareholders include Japan's Mitsubishi Heavy Industries Ltd and China Development Industrial Bank (中華開發銀行), originally plan-ned to build the first natural-gas receiving terminal in northern Taiwan and to obtain the rights to sell natural gas.

The contracts for importing LNG run for 25 years and the annual purchase volume exceeds 1.36 million tonnes.

Several international petroleum suppliers, including the US oil giant ExxonMobil Corp, TotalFinaElf of France, British Petroleum Plc and Royal Dutch/Shell Group had expressed interest in vying for the lucrative LNG contracts for the Tatan plant.

Observers noted that before a natural-gas receiving terminal can be constructed, a port must be built. This involves national land planning and the development of industrial parks, and must be approved by various government agencies, something that is difficult even if you have a lot of money.

But the most difficult part was winning a contract from Taipower to supply LNG to the Tatan plant, in order to obtain fundamental distribution channels for imported natural gas.

Criticism of Tung Ting's past "black gold" activities surrounded the construction of the port, the planning of the industrial area and even the gas-supply tender for the Tatan plant.

Through his close relationships with the leaders of the KMT government, Chen Yu-hao recruited Lee Tuan-yu (李端玉) -- then director of the Cabinet's Fifth Department, which is responsible for industrial affairs -- to serve as Tung Ting's chairman, with responsibility also for Tung Mung Development Co (東盟開發) and Chien Tai Cement Co (建台水泥), in which Tung Ting had invested.

The state-run Chinese Petroleum Corp (CPC, 中國石油) once expressed an interest in building a receiving terminal in the north of the country. But its ambitions were blocked in 1998 when the Ministry of Economic Affairs decided that the bulk of investments for a LNG receiving terminal should come from the private sector.

Tung Ting then seemed to hold a near-monopoly on the project over both domestic and international competitors. It was accused of being involved in exclusive business deals and that was the focus of the Cabinet's doubts on Feb. 12.

The government's handling of the Tung Ting investment project came in for criticism because even though a tender has not been issued for the gas supply contract for Taipower's Tatan plant, major resources had already been allocated to Tung Ting.