Defense ministry wins NT$73.19 million in damages in minesweeper case

11/01/2019 01:17 PM
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CNA file photo
CNA file photo

Taipei, Nov. 1 (CNA) The Ministry of National Defense (MND) was awarded damages of NT$73.19 million (US$2.40 million) Thursday in a high-profile case of loan fraud related to a Navy contract.

The case dates back to 2014, when the Kaohsiung-based Ching Fu Shipbuilding Co. (CFS) won a defense ministry contract to build six minesweepers for the Navy at a cost of about NT$35 billion.

After obtaining the contract, Ching Fu, the biggest private shipbuilding company in Taiwan, applied for a loan to fund the building of the six minesweepers.

In August 2017, however, the Kaohsiung District Prosecutors Office launched an investigation into the shipbuilder on suspicion that it had falsified some of the documents required to obtain the loan.

When summoned for questioning in October 2017, Ching Fu Chairman Chen Ching-nan (陳慶男) and his son, who is the vice chairman, admitted that they had forged some documents for the loan applications, according to prosecutors.

They said they did so because the company was having cash flow problems caused by insufficient funding from the MND for the minesweeper project.

Chen and his son were released after posting bail of NT$8 million and NT$5 million, respectively.

Due to financial irregularities in the shipbuilding company, the defense ministry terminated its contract in November 2017 and later filed a lawsuit with the Taipei District Court.

In the lawsuit, the MND said it was seeking a compensation of NT$77.05 million for breach of contract because the minesweeper vessels had not been delivered.

After a trial that lasted more than a year, the Kaohsiung District Court last month sentenced the Ching Fu chairman to 25 years in prison for forgery and violation of the Banking Act. In addition, he was fined NT$105 million (US$3.45 million).

In the lawsuit, the Taipei District Court on Thursday ruled in favor of the MND, and ordered the shipbuilder to pay NT$73.19 million in compensation for the losses incurred due to the breach of contract.

The ruling can be appealed, according to the Taipei court.

(By Lin Chang-shun and Ko Lin)


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