Fri, Oct 09, 2015 - Page 4 News List

Thirty-three indicted in military procurement case

By Jason Pan  /  Staff reporter

Soldiers take part in the annual Han Kuang military exercises on Sept. 10 at the Chingchuankang Air Base in Taichung.

Photo: CNA

The Taichung District Prosecutors’ Office yesterday indicted 33 people, including military officers and employees, as well as nine contractors, over their roles in a NT$4.8 billion (US$146.12 million) procurement scandal involving the production of CM-32 “Clouded Leopard” armored vehicles.

Leading the list of indictees were Chung Hsin Electric and Machinery Manufacturing chairman Chiang Yi-fu (江義福), Yi Rong Technology Co owner Chang Kuang-ming (張光明) and Chi Fu Industrial owner Hsu Ching-shun (許清順), who were charged with violating the Anti-Corruption Act (貪污治罪條例).

The three companies, along with six other contractors, were also charged with breaking the Government Procurement Act (政府採購法) by “borrowing” qualification certifications from other companies to be able to bid for military procurement tenders.

Corruption charges were laid against procurement officer Sergeant Major Wang Chien-hsin (王建興) and technician Lee Ti-kuang (李迪光) of the army’s Ordnance Readiness Development Center (ORDC), who allegedly received NT$850,000 and NT$1.17 million respectively in bribes, along with Lee Hsin-jung (林幸蓉), an employee at the Armaments Bureau, for forgery and accounting fraud.

The case stems from a 2012 tender to provide chassis, power equipment and assembly work for the CM-32 armored vehicles, with Chung Hsin Electric securing the project with a bid of NT$4.8 billion, which was well below the stated minimum of NT$7.8 billion.

According to investigators, Chiang colluded with other company owners or executives to forge documents, make deceitful transactions, fake business agreements and other fraudulent accounting practices.

The contractors allegedly bribed military procurement officers and ORDC employees to “go easy” on inspection checks and acceptance tests, while providing substandard components and accessories, most of which came from China.

For example, investigators found that for the armored vehicle’s power system, the contractors imported from China low-price refurbished hydraulic pumps (which cost NT$35,000 per unit, but were listed on record as costing NT$150,000) and steering mechanisms (cost NT$23,000, but recorded as NT$190,000).

Prosecutors said that during the investigation, they uncovered by chance another corruption case involving repair works on M60A3 main battle tanks.

They said that Chiang Tuan Industrial Co is suspected of supplying substandard wheels and metal tread plates from other countries, contravening rules of the tender that the products must be made by Taiwanese companies.

Various problems with the power system and a high breakdown rate have plagued the locally manufactured armored vehicles, prompting suspicions about the use of substandard components and collusion with contractors during the procurement and testing processes.

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