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Corruption in Taiwan: The French connection

The latest about the biggest scandal you've never heard of.

A child runs past a torpedo on display outside the Taiwan Armed Forces Museum in Taipei, Jan. 30, 2010. (Pichi Chuang/Reuters)

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.