Fri, Oct 27, 2017 - Page 3 News List

French firms fined over arms sales

Reuters, PARIS

Dassault Aviation and two other French aerospace companies on Wednesday said they had been fined a combined 227 million euro (US$267 million) in Taiwan, settling what sources familiar with the case have described as a 25-year-old dispute over an arms sale.

Warplane maker Dassault said it had been fined 134 million euro, while radar supplier Thales said it was due to pay 64 million euro and enginemaker Safran said it accounted for 29 million.

“The industrial companies are considering the steps to be taken following this decision,” the companies said in separate statements.

The total fine corresponds to the amount the government had been seeking in arbitration over the allegedly wrongful use of commissions in the sale of 60 Mirage fighters to the island in 1992.

It follows a then-record bribes fine of 630 million euro imposed by a French court on the French government and Thales in 2011 over the use of commissions to sell frigates to Taiwan in 1991, a deal that led to a major kickbacks scandal in France.

Dassault said the new case dated back to 1992 and two people close to the matter said it concerned the sale of Mirage jets.

None of the three companies made provisions for the fines.

Taiwan pursued the three companies for US$260 million in 2002, but dropped the case a year later, only to relaunch its claim for EU$226 million, claiming this represented the use of commissions that had been banned in the fighter contract.

The arms deals led to a chill of several years in relations between France and China.

The scandal surrounding French arms sales to Taiwan in the early 1990s was one of a series of cases that underpinned accusations of widespread corruption during the final years of then-French president Francois Mitterrand.

It engulfed senior executives at the former Elf oil company and lay at the heart of the tortuous “Clearstream” affair a decade ago, in which a prime minister was accused of plotting to smear his rival, future French president Nicolas Sarkozy.

The fog over France’s deals with Taiwan is clearing just as the French aerospace industry faces new turmoil over the use of sales agents at planemaker Airbus, which said it might have to pay significant fines amid UK and French investigations.

Airbus has said it shared its own findings on suspect paperwork with UK authorities, triggering the probes, but is said to be shaken internally by the affair, which has placed growing pressure on Airbus chief executive Tom Enders.

Legal experts estimate that Airbus could eventually face fines of several billion euros, eclipsing the financial fallout from France’s Taiwan arms deals or a bribery fine of £687 million (US$908 million at the current exchange rate) imposed on Rolls-Royce in Britain earlier this year.

The Ministry of National Defense did not publish a response as of press time yesterday.

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