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TAIWAN ASKS SWITZERLAND TO RETURN US$520 M IN 'LAFAYETTE' SLUSH FUND

ROC Central News Agency

2006-09-07 23:42:08

    Geneva, Sept. 7 (CNA) The Swiss Department of Justice (DOJ) confirmed Thursday that Taiwan has filed a formal application for retrieval of US$520 million in frozen illegal commissions tied to its purchase of six Lafayette-class frigates from France in the early 1990s.

    A DOJ spokesman said Taiwan's State Public Prosecutor-General Wu Ying-chao filed the application with the Swiss Department of Justice Sept. 5 demanding the return of the slush fund from Swiss banks.

    According to the spokesman, Taiwan specifically demanded the return of the sum of US$520 million from a total of US$730 million frozen in the Swiss banks.

    The sum, which the Taiwan authorities consider "damages, " includes all of the funds in bank accounts belonging to a fugitive Taiwan arms broker, Andrew Wang, and members of his family, as well as US$20 million in bank accounts belonging to Kuo Li-heng, a former Taiwan naval officer, and his brother.

    Excluding the factor of currency exchange rate fluctuations, the sum is roughly equivalent to 18 percent of the Lafayette deal's total cost of US$2.7 billion. Previous media reports said the Lafayette deal involved an 18 percent commission which violated the commission-free provision set forth in Taiwan's original contract with the French defense contractor.

    According to the Swiss judicial regulations, the DOJ will conduct an initial review of Taiwan's application. If Taiwan meets all prerequisites, the Swiss federal judge responsible for the case will then make a judgment. If the verdict is in favor of Taiwan, Wang and other relevant individuals can appeal the case to the Swiss federal court.

    DOJ officials said they cannot predict at the moment whether or when Taiwan can successfully retrieve the frozen slush funds from Swiss banks.

    Through a judicial aid agreement with Switzerland, a team of prosecutors from Taiwan managed to acquire a collection of bank files from the Swiss federal judge last November. After nearly 10 months of scrutiny over the files, Taiwan finally took the action to apply for the return of the huge sum of the frozen slush funds.

    Swiss officials said Taiwan must produce sufficient convincing evidence to prove that the funds originated from criminal activities.

    Taiwan began to seek judicial aid from the Swiss government in 2001 in an aim to retrieve the slush funds frozen at Swiss banks.

    Andrew Wang, the French arms supplier Thompson-CSF's agent in Taiwan, fled the country following the death of naval Captain Yin Ching-feng, who died under suspicious circumstances in late 1993. Yin was believed to be poised to blow the whistle on colleagues who had allegedly taken kickbacks from the Lafayette deal.

    According to a Taiwan investigation panel's estimate, the Lafayette deal kickbacks amounted to US$486 million, of which US$120 million was used to bribe Taiwan military or administrative officials.

    After Thompson-CSF, now known as Thales, remitted US$486 million to Wang's Swiss bank accounts, Wang transferred US$120 million of that sum to his accounts in Luxembourg for use in bribing Taiwan officials, according to the panel.

    The additional US$366 million that the French firm gave to Wang was probably used to bribe French officials as well as Chinese military and political leaders to prevent them from voicing opposition to the arms deal, investigators said.

(By Sofia Wu)

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