A possible corruption scandal involving the military has been handed over to the Ministry of Justice for investigation, after a legislative committee found irregularities in the bidding process for a shipbuilding project.
In a report released yesterday, the legislature's National Defense Committee concluded that the bidding process for a contract to build missile boats had been flawed, and asked for the officials responsible to be punished.
"The Ministry of National Defense decided to suspend the construction of the missile boats, and in October it brought the case before the Ministry of Justice's Investigation Bureau," Deputy Minister of National Defense Ko Cheng-heng (柯承亨) told the legislative committee in a meeting yesterday.
The committee in December formed a task force to probe the Navy's effort to build 29 missile boats.
The investigation was completed last week.
Ko said the ministry would evaluate the legislative report.
The convener of the task force, Democratic Progressive Party Legislator Lee Wen-chung (李文忠), said yesterday that corruption was likely involved in the bidding process, and that the military should not have attempted to cover up the wrongdoing.
"Obviously the tender procedure was flawed. However, a ministry review task force concluded earlier that there was no wrongdoing in the bidding process, even as the problems were mounting," Lee told the meeting.
The ministry in early 2004 published its plan to invite public bidding for the contract to build 29 missile boats for the navy.
Three major competitors for the contract emerged: the state-run China Shipbuilding Co and two large private firms, Jong Shyn Shipbuilding Co and Ching Fu Shipbuilding Co.
A round of bidding was conducted in June, and the three companies submitted their price estimates to make the boats.
The ministry says it then invited a secret panel of five navy officials and five shipbuilding experts to decide which firm was the most qualified for the project.
On June 14, the ministry awarded China Shipbuilding the NT$15 billion (US$446 million) contract to build the 29 ships for the navy.
Because of the recent controversy, however, China Shipbuilding has been unable to carry out the contract.
The legislative report focused on an unusual divergence of opinion between the naval officials and shipbuilding experts invited onto the panel that reviewed the bids.
Lee said that a list of the members on the "secret" panel had been leaked to the three competing companies.
It was very suspicious, the report said, that while the five naval officials all gave Ching Fu Shipbuilding the highest and Jong Shyn Shipbuilding the lowest ratings, the five shipbuilding experts all voted Jong Shyn the highest and Ching Fu the lowest.
The report speculated that this was unlikely to be a coincidence, and postulated that one of the bidding companies had bought off either the naval officials or the shipbuilding experts, or both.
The report said that the ministry used 12 criteria to evaluate companies for the contract.
In one of the criteria -- a firm's financial structure -- three panelists gave China Shipbuilding the highest ranking, despite the firm's shortcomings in that area, the report said.
On another criterion -- a firm's reputation -- some panelists gave Ching Fu Shipbuilding and China Shipbuilding the highest scores, although both companies have in the past failed to complete other contracts and have experienced labor problems.
Lee yesterday said that some panelists had obviously turned a blind eye to these shortcomings when they ranked the firms.
Panelists had all scored China Shipbuilding in the middle, but somehow it emerged as the winning bidder, the report said.
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