Chung-Hsin Electric and Machinery Manufacturing Corp (CHEM, 中興電工) chairman Chiang Yi-fu (江義福) was yesterday sentenced to six years in prison for fraud in connection to procurement contracts for the domestically developed CM-32 Clouded Leopard armored vehicle.
The Taichung District Court ruled that Chiang and other executives at the firm had breached the Securities and Exchange Act (證券交易法) and that the firm had made about NT$2.1 billion (US$75.2 million) in illicit profit from the procurement deal.
CHEM general manager Kuo Hui-chuan (郭慧娟) was sentenced to a suspended jail term of two years, while deputy general manager Lee Liang-chang (李良章) was sentenced to four years in prison and Pan Shih-yuan (潘世遠), another senior manager at the firm, was sentenced to two years.
Photo: Chang Jui-chen, Taipei Times
Wu Chun-chi (吳俊奇), an assistant manger at the firm, was sentenced to one year and 10 months in prison, while Wang Ching-chia (王景洽), a technician at the firm, was sentenced to one year and eight months.
The ruling can be appealed.
The court said that Chiang colluded with subcontractors and suppliers to forge documents and make fraudulent transactions.
He also bribed military officers and army staff involved in the procurement, it said.
The firm was in 2012 awarded a NT$4.8 billion contract with the Ministry of National Defense to procure Cloud Leopard chassis and power-train equipment.
However, the company did not manufacture the parts itself, but subcontracted other local firms, including Yi Rong Technology Co (億嶸科技), Wei Shuan Co (崴軒) and Chi Fu Industry (啟福工業).
Prosecutors later probed CHEM, its subcontractors and other parties involved on suspicion that the delivered parts had not been checked according to the requirements and that substandard materials had been used, the court filing showed.
The vehicles were found to have high defect rates, the filing showed.
Prosecutors found that the three subcontractors did not have the certification required in the contract and used parts imported from China, which was prohibited in the original procurement contract, it showed.
In August, the court sentenced military technician Lee Ti-kuang (李迪光) to seven years and eight months in prison, and fined him NT$700,000, while Rong Yi Technology owner Chang Kuang-ming (張光明) was sentenced to two years and two months, and was fined NT$300,000.
The court found that Chang had paid Lee bribes totaling NT$1.17 million for breaching protocols when checking the Clouded Leopards upon taking delivery of them.
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