Tech firm head detained over China-made drone parts

Kaohsiung, Aug. 18 (CNA) The head of a Taiwanese technology company has been detained on suspicion of violating the National Security Act by using Chinese-made components in drones supplied under a military procurement contract, the Ciaotou District Prosecutors Office said Tuesday.

The ROC Army's 8th Field Army, which referred the matter to prosecutors, said it had discovered the potential use of Chinese components during a contract review and acceptance inspection of the drones.

The drones were supplied by an unnamed tech company that was awarded a NT$2.95 million (US$92,558) tender from the 8th Field Army last year for a training drone procurement project.

According to prosecutors, the company head, surnamed Chang (張), and a technical supervisor surnamed Lo (羅) from another unnamed technology company allegedly assembled the drones in Taiwan using Chinese-packaged drone chips, Chinese-made flight control boards and other components.

Prosecutors said that Lo and Chang also concealed product labels and submitted false certificates of origin to fool military inspectors into believing the drones complied with tender requirements banning the use of components from China, Hong Kong and Macau.

Investigators searched the two companies on Aug. 11, seized evidence and questioned the suspects and witnesses.

Following questioning, prosecutors sought the detention of Chang and Lo on suspicion of violating the National Security Act by supplying products manufactured in China, as well as attempted fraud under the Criminal Code.

A court approved Chang's detention and ordered that he be held incommunicado, while Lo was released without bail.

Prosecutors said the case is the first involving alleged National Security Act violations linked to a military drone procurement project.

Taiwan's military said payment has been withheld from Chang's company, adding that it will seek to bar the contractor from future government tenders, terminate the contract and seek damages for breach of contract.