Sat, Oct 28, 2017 page1

• Cabinet to probe MND, state-run bank

  DOMINO EFFECT: Banks filed lawsuits to seize Ching Yang Marine Enterprises’ assets after it failed to pay interest on a loan underwritten by troubled shipbuilder Ching Fu

  • By Crystal Hsu and Jonathan Chin / Staff reporter, with staff writer and CNA
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  The Executive Yuan is to investigate the Ministry of National Defense (MND) and state-owned First Financial Holding Co (第一金控) for their role in a scandal revolving around navy contractor Ching Fu Shipbuilding Co (慶富), Premier William Lai (賴清德) said yesterday.

  Lai, speaking to the media before entering the Legislative Yuan in Taipei for an interpellation, said he has named Vice Premier Shih Jun-ji (施俊吉) to lead the probe.

  Ching Fu, which was contracted to build minesweepers for the navy, is the subject of a criminal investigation into whether it defrauded First Commercial Bank (第一銀行) and other state-run banks of NT$15.4 billion (US$508.6 million) in a syndicated loan.

  

  Ching Fu Shipbuilding Co chairman Chen Ching-nan, right, reports at a Kaohsiung police station with his wife and son, which they have to do every day beginning yesterday.

  Photo: CNA

  First Commercial Bank, the holding company’s main subsidiary, on Wednesday said the loan is in default because the shipbuilder had breached contractual terms.

  The investigation is to determine whether the ministry followed the law when awarding the major contract to the embattled shipbuilder and whether First Commercial Bank had performed due diligence, Lai said.

  Shih has been instructed to conduct a thorough investigation without regard to rank or office, report any breaches of the law to prosecutors and replace any First Commercial Bank managers found to have been negligent in their duties, the premier said.

  Minister of Justice Chiu Tai-san (邱太三) has been asked to provide all possible aid to the investigation, Lai said, adding that the public should rest assured that the probe will be thorough and impartial.

  Separately yesterday, the creditor banks declared a syndicated loan to Kaohsiung-based Ching Yang Aqua Marine Enterprises Co (慶陽海洋), an affiliate of Ching Fu, in default due to its failure to pay back interest.

  State-owned Land Bank of Taiwan (土地銀行), the lead bank of Ching Yang’s syndicated loan of NT$950 million, made the decision after visiting the firm.

  The creditor banks — which include Taiwan Cooperative Bank (合庫銀行), Agricultural Bank of Taiwan (農業金庫), Shin Kong Commercial Bank (新光銀行) and Bank of Kaohsiung (高雄銀行) — granted Ching Yang the loan in 2013 to build and operate a marine environment exhibition hall next to the National Museum of Marine Science and Technology in Keelung’s Badouzi Fishing Harbor (八斗子漁港).

  The project has stalled.

  As Ching Yang failed to make an interest payment earlier this month and its underwriter, Ching Fu, is in financial trouble, the banks have filed lawsuits with the Kaohsiung District Court to freeze Ching Yang’s assets, a Land Bank of Taiwan official said.

  The banks said they plan to find buyers to take over operation of the museum, which has generated revenue from ticket sales since 2013.

  The banks could each incur losses of between NT$100 million and NT$150 million, depending on the degree of their participation in the loan, the official said.
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