Democratic Progressive Party (DPP) lawmakers yesterday identified major procedural abnormalities in a scandal-ridden navy shipbuilding program that resulted in Ching Fu Shipbuilding Co (慶富造船) securing the contract, with three top military officials, including former minister of national defense Kao Kuang-chi (高廣圻), urged to expound on their involvement in the case.
DPP Legislator Wang Ding-yu (王定宇) pointed to flaws in the tender process and subsequent program management by the Ministry of National Defense, which “revived” Ching Fu from potential disqualification.
Ching Fu, which in 2014 was awarded the NT$35.8 billion (US$1.19 billion at the current exchange rate) contract to build six minesweepers as part of a domestic warship program, secured the contract after the ministry lowered the minimum asset requirement for bidders from one-10th to one-200th of the contract’s value.
Photo: Chang Chia-ming, Taipei Times
That year, a ministry tender review committee — without its convener and deputy convener present — drew lots to pick a contractor for the minesweeper program, with Ching Fu securing the contract over CSBC Corp, Taiwan.
In 2015, Ching Fu failed to acquire export permits from its subcontractors, Italian shipbuilder Intermarine and US defense firm Lockheed Martin, but the ministry did not dissolve its contract, despite the failure.
State-run banks approved a syndicated loan of NT$20.5 billion to Ching Fu, even though the company was determined to be financially unstable, Wang said.
DPP Legislator Chuang Ruei-hsiung (莊瑞雄) questioned how Ching Fu, which has registered capital of about NT$500 million, was able to secure a tender worth NT$35.8 billion.
Kao, former navy commander-in-chief Tung Hsiang-lung (董翔龍) and former navy deputy commander-in-chief Pu Tze-chun (蒲澤春) should explain decisions that appear to be tailor-made for Ching Fu, Wang said, adding that they might have been pressured into the arrangement.
The ministry might begin the contract dissolution process with Ching Fu by the end of this month, when Intermarine and Lockheed Martin are expected to dissolve their contracts with the firm, Wang said, adding that Ching Fu is on the brink of bankruptcy and its employees have not been paid in months.
“The dissolution of Ching Fu’s contracts with its subcontractors and its bankruptcy constitute a condition for the military to terminate the contract,” Wang said.
Following dissolution of the contract, the ministry would keep Ching Fu’s NT$9 billion performance bond and demand compensation for losses, he added.
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