Taiwan Wants $520M in Frozen Frigate Corruption Funds Returned
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Our November 2005 article “Full Steam Ahead for Taiwan Frigate Corruption Investigation” explained the scandal’s background, and noted the beginnings of Swiss cooperation via the unsealing of bank files. The controversy swirls around Taiwan’s $2.8 billion procurement of 6 Kang Ding Class multi-role stealth frigates from France in 1991. These ships are derivative of the Lafayette Class, which has been used as the base platform for several nations’ frigate designs – but note the many critical weaknesses detailed in this GlobalSecurity.org article due to technologies not transferred to Taiwan.
So what’s the scandal? And is there really a murder involved? Yes, there is. The scandal is described in brief below, and Swiss authorities have just handed $34 million back – with conditions attached.
The Scandal
In brief, Taiwanese authorities allege that state-owned Elf Aquitaine paid bribes through French firm, Thomson-CSF (now Thales), to persuade French and Taiwanese authorities to approve the sale of the warships. Investigations reportedly began after Taiwanese authorities concluded from the inflated price that the deal constituted a serious case of international corruption.
Naval Captain Yin Ching-feng, who is believed to have been ready to blow the whistle on the corruption, was murdered in the course of the Elf Aquitaine affair. Andrew Wang has been charged in absentia with the crime. Further details can be found in DID’s November 2005 article.
Funds related to the deal remain blocked in 46 accounts in different banks in Switzerland, and authorities in Liechtenstein have frozen a further $27 million. Defense Aerospace now reports that Taiwan has asked Switzerland to return $520 million (SFr 646.7 million) frozen in Swiss banks, on the grounds that this represents their damages. The case is now in the hands of a Swiss magistrate, and once a decision is rendered further appeals are possible.
UPDATES:
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June 13/07: The Swiss Bundeskanzlei (Federal Chancellery) has handed $34 million back to Taiwan as an interim measure – with conditions attached re: legal proceedings against the accused. The remaining assets are still frozen. A decision on their handover will be made by the Federal Examining Magistrate in a second phase in proceedings. Specifically, he must examine whether or not these assets are clearly of criminal origin – in which case they can be handed over to Taiwan without the need for a recovery order – or if their handover should be linked to other conditions under Swiss law.
To get a sense of the process involved in the $34 million return, on Feb 2/07, the competent Federal Examining Magistrate ordered the return of $34 million to Taiwan – with the express consent of the two account-holders concerned. The reason for this consent may be found in the conditions attached: assurances from the Taiwanese authorities that legal proceedings against the two persons in question “would comply with human rights principles.” Given tender European government sensibilities, and the implications of the charges, this is probably code for assurances that the men would not be executed.
On May 1/07, the Federal Office of Justice determined that the guarantee provided in April 2007 by the Taiwanese Minister of Justice was sufficient to fulfill the Federal Examining Magistrate’s conditions. Once this ruling had become legally enforceable, notice could be given on the fixed-term deposits in which the assets were held. The assets were finally transferred to the Taiwanese judicial authorities on June 13/07. BK release.
