The Control Yuan yesterday censured the Veteran Affairs Council (VAC) over a major collusion scandal that resulted in losses of at least NT$188 million (US$5.97 million) for the government.
The government watchdog also censured Executive Yuan and National Development Council officials for dereliction of duty and failing to supervise the VAC.
An investigation led by Control Yuan member Wang Mei-yu (王美玉) found inappropriate business conduct and conflict of interest in at least 19 of the Veteran Affairs Council’s construction projects, which were contracted to RSEA Engineering Corp and L&K Engineering Co.
RSEA was established in 1956 as a state-run engineering company under the VAC’s forerunner, the Veterans Affairs Commission.
In line with a government campaign to privatize state-run enterprises, RSEA was acquired by L&K Engineering in 2009 in a deal that sparked a great deal of controversy.
After privatization, RSEA continued to be headed by Ou Lai-cheng (歐來成) as chairman and Hsiao Ching-chih (蕭敬止) as deputy general manager, who had served in those posts since 2007. Both men have substantial holdings in the company.
Despite the intimate business links and conflict of interest, Ou and Hsiao was allowed to negotiate engineering works on the VAC’s tenders, allowing RSEA to secure many of the contracts.
The probe found that contract details left expenditures and workers’ hours open to conditions set by Ou and Hsiao, who proceeded to add extra work hours and other work-site management fees, inflating government expenses on these contracts by NT$188 million, the report said.
The report cited questionable business conduct by the RSEA on these projects and negligence by various officials.
“Public assets were sold far below market prices to profit certain companies and individuals during the privatization of the state enterprise. The probe also found instances of business collusion, conflict of interest and profiteering by designated companies in the cases it investigated,” the report said.
The report recommended that responsible officials and agencies be censured for failing to protect the interests of the government and the public, and for seriously damaging the nation’s image.
In related news, Veteran Affairs Council Director Tung Hsiang-lung (董翔龍) came under fire in the legislature yesterday, with lawmakers questioning the council for providing water and electricity subsidies to several housing units for retired soldiers, to the tune of more than NT$10 million each year.
Lawmakers said the VAC should cut the utility subsidy because most of the homes are now occupied by the veterans’ female Chinese spouses, along with their friends and relatives from China, and that many of them are negligent in taking care of their husband.
Tung said he would look into the matter and ensure that the retired soldiers are being looked after.
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