Lafayette Class
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Taiwanese State Public Prosecutor-General Wu Ying-chao ordered the unsealing of Swiss bank files on Thursday related to a high-profile kickback scandal involving Taiwan’s $2.8 billion procurement of six Kang Ding Class multi-role semi-stealth frigates (aka. Lafayette Class, which has been used as the base for several nations’ frigate designs) from France in 1991.

Wu’s directive marked an about-face from his previous announcement that the top-secret files would not be unpacked until after the December 3 elections; but Swiss authorities have demanded that the Taiwan government come up with a request before mid-December 2005 for the return of the SFR 900 million Lafayette-related slush fund frozen in Swiss banks. That demand changes the complexion of the investigation, and could have implications for both Taiwan’s upcoming elections and its stalled defense procurement plans.

If the Swiss deadline is missed, Wu said, the key suspect in the case, Andrew Wang, would be able to regain access to the fund and destroy all relevant evidence. Wang has been charged in absentia with murder (naval Captain Yin Ching-feng, believed to have been about to blow the whistle), corruption, money laundering and fraud.

Switzerland has provided Taiwan and two other involved countries with a collection of bank files related to the Lafayette deal. The files include 46 bank accounts under the names of Andrew Wang (French firm Thomson-CSF’s – now Thales – Taiwan agent), his three sons, and Wang’s company, all of whose accounts have been frozen by the Swiss Federal Court.

The Taiwan Government Information Office notes that the files also include a number of previously unexposed overseas bank accounts related to the Lafayette frigate deal, as well as information about relevant capital flow in Switzerland – including deposit times and destinations of the capital.

This could get interesting.

Depending on the results of the investigation, the consequences for Taiwan’s defense procurement could be substantial.

DID has already covered the KMT party’s extreme efforts to block a mutli-billion set of defense procurements they supported while in power, which are designed to improve the island’s security against a Chinese invasion. The equipment includes Patriot PAC-3 missiles to defend against Chinese aircraft and missiles, P-3C Orion maritime patrol aircraft to counter a Chinese submarine blockade, and 8 modern diesel submarines to supplement the 2 semi-modern diesel subs and 2 WW2 vintage subs Taiwan has now. The motivations behind their post-2000 efforts to block their own former requests are unclear, though allegations of mainland China investments and corruption are not uncommon.

Depending on where this investigation leads, it could affect the coming elections – either giving the government the power to push through the weapons sale, or causing a change that might kill the sale entirely and lead to a rethinking of US military commitments per warnings issued the US Congress’ Taiwan caucus and others.

See also:

• DID UPDATE (Sept 13/06) – Taiwan Wants $520M in Frozen Frigate Corruption Funds Returned. A Swiss Magistrate is considering the request.

• All of DID’s Taiwan-related coverage

• The Taipei Times for reports of ongoing developments in Taiwan.