Democratic Progressive Party (DPP) lawmakers on Saturday proposed to slash defense budgets allocated to Ching Fu Shipbuilding Co’s (慶富造船) minesweeper program, after the beleaguered contractor missed Friday’s deadline for a bond obligation.
The shipbuilder has been embroiled in a series of scandals: It is the subject of an ongoing financial fraud investigation, missed milestones on the minesweeper project and has failed to pay NT$720 million (US$23.99 million) in advance payment bonds by the deadline of Friday last week.
The Ministry of National Defense should have terminated the contract on Friday, after Ching Fu missed the deadline to meet its obligations, DPP Legislator Lo Chih-cheng (羅致政) said.
Recent news of a “patriotic citizen” trying to buy out Ching Fu should be dismissed as a rumor spread and fabricated by Ching Fu president Chen Ching-nan (陳慶男) as a ploy to buy time, Lo said.
“Ching Fu’s lack of capital makes contract dissolution a foregone conclusion,” he said, adding he has filed to slash NT$3.5 billion (US$116.61 million) from the defense budget allocated to Ching Fu for its fourth-phase payment.
If the ministry relents now and agrees to further delays, the military may breach the contract and expose itself to new liabilities, DPP Legislator Wang Ding-yu (王定宇) said.
Ching Fu is within its rights to look for sources of funding, but it should not be allowed wriggle room in the government contract-specified timetable, DPP Legislator Tsai Shih-ying (蔡適應) said.
“Since it is not meeting its deadlines, contract termination, fines or confiscations should ensue as per the contract’s terms,” he said.
To date, Ching Fu has not delivered the promised bonds to the navy or made up for lost time in its project deadlines, sources said, adding that the ministry repeatedly told Ching Fu to hand out the owed payments and make amends for its failures to meet milestones, but Chen’s statement regarding a potential buyout has complicated matters.
The ministry’s legal counsels are expected to confer tomorrow to discuss Ching Fu’s breach of contract, including its insufficient liquidity level and failures deliver contract items on time, they said.
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