Shipbuilder's top executives released on bail in loan fraud case

2017/08/10 21:55:50 fontsize-small fontsize-default fontsize-big
CNA file photo of Chen Ching-nan (陳慶南)

CNA file photo of Chen Ching-nan (陳慶南)

Taipei, Aug. 10 (CNA) Three top executives from Ching Fu Shipbuilding Co. (CFS), the largest private shipbuilder in Taiwan, were released on bail Thursday after being questioned by prosecutors overnight in an alleged loan fraud case linked to a contract to build minesweepers for the Republic of China Navy.

CFS Chairman Chen Ching-nan (陳慶南) was freed after paying bail of NT$8 million, while his son Chen Wei-chih (陳偉志) and wife Chen Lu Chao-hsia (陳盧昭霞), who served as the company's vice chairman and director, respectively, were released after paying NT$5 million and NT$500,000, according to a statement issued by the Kaohsiung District Prosecutors Office.

An investigation by prosecutors found that the alleged fraud occurred when CFS was trying to obtain a NT$20.5 billion syndicated loan from a group of nine domestic lenders led by First Bank, after winning a NT$35.29 billion contract in October 2014 to build six minesweepers for the Navy.

CFS, with registered capital of just NT$530 million, was told by the lenders that it needed to increase its capital to facilitate the loan application.

To meet the lenders' requirement, CFS used bogus documents to falsify four capital increments from November 2014 to May 2016 to boost its capital to NT$4 billion, the investigation showed.

From March 2015 to November 2016, CFS successfully obtained funds totaling US$67.33 million from the lenders using false receipts and contracts signed with four paper companies registered overseas under the name of Chen Wei-chih, the investigation revealed.

CFS also received transitional funding totaling US$7.1 million in 2015 using similar methods, the investigation showed.

Chuang Hsiu-yuan (莊秀媛), deputy chief of the Banking Bureau under the Financial Supervisory Commission, said that NT$15 billion of the NT$20.5 billion promised by the lenders, has already been paid.

It remains up to the lenders whether they choose to pay the outstanding amount, Chuang said.

Meanwhile, CFS said in a statement that the company will fully cooperate with the ongoing investigation and stressed that the case has not impacted the construction of the minesweepers or company operations.

(By Chang Che-fong, Tsai Yi-chu and Y.F. Low)

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