Mon, Oct 24, 2005 page3

• Corruption claims swamp contract for missile boats

  • BY RICH CHANG / STAFF REPORTER
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  The controversy that has emerged over the bidding process for a Ministry of National Defense (MND) boat-building contract has thrown a spotlight on the local arms trade's unhealthy stew of power politics and influence-peddling.

  The flap began last week when People First Party (PFP) Legislator Sun Ta-chien (孫大千) accused companies involved in the bidding of leaning on officials in order to secure a lucrative NT$15 billion (US$446 million) contract to build 29 missile boats for the navy. Sun further alleged that former presidential adviser Chen Che-nan (陳哲男) and Vice Minister of Economic Affairs Hou Ho-hsiung (侯和雄) pressured the ministry and the firm that won the contract to divert some work to a second company. Chen and Hou deny having done so.

  In the wake of Sun's claims, calls are mounting in the legislature for a thorough investigation of the bidding on the missile-boat contract to uncover the truth, and hold responsible any businesspeople or government officials that may have engaged in wrongdoing.

  pressure

  Early last year, the MND published its plan to invite public bids for the contract. According to Sun, the nation's shipbuilding companies quickly began to exert pressure on legislators and other government officials to get the business.

  Three major competitors for the contract emerged: the government's China Shipbuilding Co (CSBC) and two major private firms, Jong Shyn Shipbuilding Co (JSS) and Ching Fu Shipbuilding Co (CFS), Sun said.

  A round of bidding was finally conducted in June, and the three companies submitted their prices for making the boats. The ministry says it then invited a secret panel of five navy officials and five shipbuilding experts to decide which firm was the most qualified for the project.

  On June 14, the ministry awar-ded the deal to CSBC, and it signed a contract with the company on June 24.

  According to the MND, JSS immediately filed complaint letters to the Presidential Office and Executive Yuan's Public Construction Commission, claiming the bidding process was flawed. The commission launched a probe into the matter.

  In its Sept. 16 report, the commission agreed with JSS and said that the MND should conduct the bidding process all over again. The report concluded that corruption was likely involved in the first round of bidding. But the commission did not make that finding public, and the matter simmered behind the scenes until legislators publicized the issue last week.

  In remarks to the legislature last week, Minister of National Defense minister Lee Jye (李傑) said that outside meddling in the contract had delayed the first round of bidding from last year until this past June, and that such interference had been almost unbearable.

  "The MND is almost unable to stand the pressure. At worst, we could cancel the shipbuilding plan," Lee told legislators. "The MND has probed the matter and will send officials to prosecutors if they are found to be involved in the scandal."

  Lee declined to tell legislators the identities of politicians who had lobbied on behalf of the shipbuilding firms.

  But the PFP's Sun was more than willing to name names. According to Sun, JSS could not accept the results of the bidding process, and so began to tap its political connections to force the navy and the CSBC to transfer to it some work on the project.

  "JSS's chairman Han Pi-hsiang (韓碧祥), asked former presidential adviser Chen Che-nan and Vice Minister of Economic Affairs Hou Ho-hsiung to help the company to participate in building the missile boats, which they did," Sun alleged. "He also asked for Vice President Annette Lu's (呂秀蓮) help when she visited the company in Kaohsiung."

  Sun also said that CFS's chairman Chen Ching-nan (陳慶男), one of the businesspeople who accompanied President Chen Shui-bian (陳水扁) on his visit to the Marshall Islands in May, had a cozy relat-ionship with the president.

  "Both men's close relationship with powerful politicians tells us why they could control the MND's panelists and cause the ministry so much trouble," Sun said.

  Lee said that to protect the reputation of the government and the MND, the whole debacle should be thoroughly investigated so that the truth can be known.

  cross-party outrage

  At a press conference last week, Democratic Progressive Party (DPP) Legislator Lee Wen-chung (李文忠) joined calls for a review of the bidding process.

  Lee said that the commission's probe had found an unusual divergence of opinion between the navy officials and shipbuilding experts invited onto the panel that reviewed the bids.

  "It was very suspicious that while five navy officials scored CFS highest and the JSS lowest, five shipbuilding experts voted JSS highest and CFS lowest," Lee said. "Was that a coincidence, or did the two companies control either navy officials or shipbuilding experts?"

  Lee said that according to the commission's investigation, the MND used 12 criteria to evaluate companies for the contract. In one of the criteria, the firms' financial structure, three panelists gave CSBC the highest ranking, despite the firm's shortcomings in that area.

  On another criteria, the firms' reputation, some panelists gave CFS and CSBC the highest scores, even though both companies have in the past failed to complete other contracts and have experienced labor problems.

  "Obviously some panelists turned a blind eye [to these shortcomings] when they ranked the firms," Lee said. "Those panelists may have been bought."

  Lee said that the MND's list of the panelists responsible for making recommendations on the contract, which should have been kept secret, was leaked to the three competing companies.

  Lee said panelists had scored CSBC in the middle, but that it somehow emerged as the winning bidder.
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