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Lafayette slush fund still frozen

A slush fund from the scandal-plagued Lafayette frigate deal between Taiwan and France in the early 1990s is still frozen in a Swiss bank account, Taiwan’s top prosecutor confirmed yesterday.

State Public Prosecutor-­General Chen Tsung-ming (陳聰明) made the remarks while answering questions at a Legislative Yuan committee meeting following recent news reports that said a Swiss federal court had earlier this month revoked a 1996 court ruling that determined that the French contractor paid kickbacks on the Lafayette deal in violation of its contract with Taiwan.

A local media report said that the Swiss court’s about-face could have a negative impact on Taiwan’s chances of winning an international commercial arbitration that is under way in France.

REQUEST

Taiwan has requested the repayment of US$520 million in unlawful kickbacks from Thales — the French company that sold six Lafayette frigates for US$2.5 billion to the country in 1991.

At the time, the company operated under the name Thomson-CSF.

Under Article 18 of the contract, the French contractor was prohibited from making any kind of commission payment.

In the arbitration petition, Taiwan is also demanding payment for 17 years’ worth of interest on the money.

The French contractor insists it did not pay any commission to secure the deal, but the French government has refused to provide any information about the money trail, citing the need to protect its defense establishment, which has made it difficult to resolve the case.

SETBACK

Local media reports have said that the latest Swiss court ruling seemed to back the French claim and could eventually lead to Taiwan’s loss in the arbitration process.

Responding to lawmakers’ concerns about the prospects for the case, Chen said that the Oct. 8 Swiss court ruling clearly states that all the Taiwan-related Lafayette slush funds would remain frozen in a Swiss bank account at Taiwan’s request.

Chen was referring to US$495 million in unlawful kickbacks on the Lafayette deal paid to Andrew Wang (汪傳浦), the middle man who was Thompson-CSF’s agent in Taiwan.

Chen said the Swiss court’s writ would remain in force until after a Taiwanese court has made a final ruling on the Wang-related corruption case.

CLAIMS

Taiwanese investigators claim that Thompson-CSF paid the US$495 million to Wang and a further 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) under suspicious circumstances.

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 by Taiwanese authorities in connection with Yin’s murder since September 2000.
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