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Weapons of Mass Destruction (WMD)

Government will not invest in 'Taiwan Goal' defense firm: Cabinet

ROC Central News Agency

2008-02-23 20:20:07

    Taipei, Feb. 23 (CNA) Premier Chang Chun-hsiung has issued an instruction that no government funds will be used to bankroll a controversial joint venture defense company, Executive Yuan Secretary-General Chen Chin-jun said Saturday.

    Chen made the remarks in a news conference during which he announced the resignation of Minister of National Defense Lee Tien-yu, who said he had not "properly" implemented the establishment of Taiwan Goal, a private arms firm set up last month. Chen also announced Lee's successor, Tsai Ming-shian.

    Chen noted that the government had originally hoped that the company could help upgrade the nation's defense industry.

    But he lamented that opposition lawmakers have "grilled and smeared" Chang and related Cabinet members over what they called a "suspicious source of the company's funds" -- almost entirely from government agencies and state-controlled corporations.

    Chen said government funds will not be channeled into Taiwan Goal and that the company will have to depend on itself for funding. "If the government wants to buy weaponry, it will not commission the company to make the purchases," he said. "No government funds have yet entered the company, the company has not signed contract with the government and the government has not commissioned it to purchase weaponry," he reaffirmed, adding that the government will "not spend even one dime" investing in the project or any other private arms firms related to the defense industry.

    Asked whether Taiwan Goal Chairman Wu Nai-jen, a heavyweight of the ruling Democratic Progressive Party and head of the China Steel Machinery Corp. -- a subsidiary of Taiwan-based China Steel Corp. in which the government has more than 20 percent stakes -- will stay in his post, Chen said that is his own business.

    Wu issued a news release earlier that day that the controversy surrounding the project, has "switched the focus of helping develop the nation's defense industry, which was the purpose of forming the company." "The company will not be able to maintain its private enterprise capacity now and its existence has become meaningless under the circumstances, " Wu said, adding that he will soon call a shareholders' meeting to discuss the disbanding of the company.

    Chen said the government had acted in accordance with the National Defense Act and the Organic Act of the Armament Bureau under the Ministry of National Defense to cooperate with private enterprises to develop the defense industry.

    On an allegation leveled by opposition Kuomintang (KMT) Legislator Chang Hsien-yao that Taiwan Goal negotiated with France last month to buy Rafale jet fighters, Chen said that this kind of information "is not suitable for public disclosure."

    He noted that China has continued to squeeze Taiwan by preventing other foreign countries from selling it weaponry, putting the nation into a very difficult plight.

    Moreover, the company has only engaged in initial contacts with arms suppliers, he went on, adding that "random speculation may undermine national security."

    Taiwan Goal registered with the Ministry of Economic Affairs Jan. 28 as a private company, with capital of NT$1 billion (US$31.15 million) and paid-in capital totaling NT$80 million.

    According to information provided by the Executive Yuan, the first-stage capital of the company will be NT$200 million. The initial funding of NT$80 million has been collected, including NT$50 million from China Steel Machinery Corp. and NT$30 million from a subsidiary of Chunghwa Telecom.

    But NT$90 million from the Ministry of National Defense, which had planned to hold 45 percent of the company shares and was the largest shareholder under the original plan, and NT$30 million from the Yao Hua Glass Co. -- a company under the Ministry of Economic Affairs -- had yet to be injected.

(By Lilian Wu)

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