The Ministry of National Defense was on Thursday awarded damages of NT$73.19 million (US$2.4 million) in a high-profile case of loan fraud related to a navy contract.
The case dates back to 2014, when Kaohsiung-based Ching Fu Shipbuilding Co (慶富造船) won a NT$35 billion ministry contract to build six minesweepers for the navy.
After obtaining the contract, Ching Fu, the nation’s biggest private shipbuilding company, applied for a loan to fund the construction of the vessels.
However, the Kaohsiung District Prosecutors’ Office in August 2017 launched an investigation into the shipbuilder on suspicion that it had falsified some of the documents required to obtain the loan.
When summoned for questioning in October 2017, Ching Fu chairman Chen Ching-nan (陳慶男) and his son, Ching Fu vice chairman Chen Wei-chih (陳偉志), admitted that they had forged some documents for the loan applications, prosecutors said.
They reportedly said that they did so because the company was having cash flow problems caused by insufficient funding from the ministry for the project.
Chen and his son were released after posting bail of NT$8 million and NT$5 million respectively.
Due to financial irregularities at the company, the ministry in November 2017 terminated the contract and later filed a lawsuit with the Taipei District Court.
In the lawsuit, the ministry said that it was seeking compensation of NT$77.05 million for breach of contract, because the minesweeper vessels had not been delivered.
After a criminal trial that lasted more than a year, the Kaohsiung District Court last month sentenced Chen Ching-nan to 25 years in prison for forgery and contraventions of the Banking Act (銀行法). He was also fined NT$105 million.
The Taipei District Court on Thursday ruled in favor of the ministry in the civil lawsuit and ordered the shipbuilder to pay NT$73.19 million in compensation for losses incurred due to the breach of contract.
The ruling can be appealed.