Corruption in Taiwan: The French connection

TAIPEI, Taiwan — His body was found bobbing in the surf off Taiwan's east coast in 1993.

To this day, no one is sure exactly how or why Navy Captain Yin Ching-feng died.

But many here have long suspected he was murdered because he was about to blow the whistle on massive corruption in a $2.8-billion deal that sold six Lafayette-class French frigates to Taiwan.

The "Lafayette Affair" has dragged on for nearly two decades and has involved at least eight bizarre deaths, multiple court cases, hundreds of millions in frozen Swiss bank accounts and high-level government probes in both Taiwan and France that have reached deep into the corridors of power.

"The scandal was perhaps one of the biggest arms corruption cases in modern history, with literally bags of money of being traded back and forth between China, Taiwan and France," said Wendell Minnick, Asia bureau chief for Defense News.

"It had the feel of an international spy thriller, with eight mysterious deaths. Two of them either jumped or were pushed off buildings."

Last week, a Paris-based court of arbitration ruled that the French company behind the deal, Thales (formerly called Thomson-CSF), owed Taiwan 630 million euros (about $800 million) for violating terms of the contract — codenamed "Contract Bravo" — that forbade commissions to middlemen.

If the decision is upheld, French taxpayers will foot 70 percent of the bill, because a state-owned shipbuilder had the main stake in the contract, according to Le Monde

Thales disputes the finding and has said it will appeal for a reversal through all available channels.

The finding has put France's defense industry under the spotlight again, as it faces separate allegations of graft involving the 1992 sale of fighter jets to Taiwan and other weapons sales to Malaysia and Pakistan.

Thales is accused of greasing the wheels for the politically sensitive sale of warships to Taiwan by using middlemen to dole out hundreds of millions of dollars in kickbacks from slush funds in Swiss bank accounts to politicians and military officials in Taiwan, China and France.

The Lafayette case "tells us how arms companies would take advantage of the fact that Taiwan was rich, isolated and ready to buy at any price for weapons," said Jean-Pierre Cabestan, a French expert on cross-strait affairs at Hong Kong Baptist University.

At the center of the tortuously complicated case is Andrew Wang, an arms broker representing Thales in the deal. He fled Taiwan in 1993 after Captain Yin was found dead, and his whereabouts are unknown. (Taiwan's lack of extradition treaties with most countries makes it easy to escape the reach of the island's courts.)

Meanwhile, Swiss authorities have frozen hundreds of millions in Wang's bank accounts until various inquiries and court cases have been resolved.

Besides Captain Yin, other deaths connected to the case include Yin's nephew; a Taiwan bank official connected to the Navy; Thierry Imbot, a French intelligence agent and son of a former head of the French spy service; and Jacques Morrison, a former Taiwan-based agent for Thales, according to a book by Thierry Jean-Pierre

Imbot fell from his Paris apartment and Morrison also plunged from a high window.

A Taiwan government investigation concluded in 2001 that some $400 million in kickbacks was doled out in the deal. Six Taiwan navy officers, including a vice admiral, were charged with corruption that year. A ruling is due next month.

France followed up with its own probe, which at one point ensnared current president Nicolas Sarkozy. But documents that supposedly implicated Sarkozy in accepting bribes for the Lafayette deal were later ruled to be fakes.

In 2008 a French judge halted the probe, citing a lack of evidence. The French government has refused to release documents related to the case on grounds of national security.

Hong Kong Baptist University's Cabestan said classified documents are believed to list prominent French politicians on both the right and left who took bribes in the Lafayette deal, and possibly high-ranking Chinese officials as well. All received payouts in exchange for allowing the sensitive sale to proceed (China sees Taiwan as part of its territory and angrily objects to any arms sale to the island).

That secret list is a ticking time bomb in French politics, said Cabestan. "That's what the French public is most interested in, and what French politicians are most worried about," he said.

"Every time a new defense minister comes in there's an attempt by the judiciary and courts to get access to the list," said Cabestan. "But then the new minister looks at the list, and realizes it’s a bombshell. And so it remains classified."

"I think it will remain classified for many years, until these people are dead or retired," he said.

Now, some in Taiwan want to probe possible kickbacks as part of a multi-billion deal selling French-made Mirage fighter jets to Taiwan in 1992. The same middleman, fugitive Andrew Wang, is suspected of accepting kickbacks in that sale, too.

France promised China in 1994 that it would stop selling weapons to Taiwan. That leaves the United States as the island's sole major arms supplier.

Defense News' Minnick said the Lafayette scandal "reshaped the way Taiwan conducts arms deals" and made the island dependent on slower, pricier purchases through the U.S. Defense Security Cooperation Agency.

The U.S. angered Beijing in January by approving $6.4 billion in defensive weaponry to Taiwan, but Washington has not yet responded to Taiwan's request for more than 60 advanced F-16 warplanes. 

Relations between China and Taiwan have improved considerably in the last two years, but Taiwan still faces a rising military threat from the People's Liberation Army, according to Taiwan's defense ministry and the Pentagon.