Thales ordered to pay Taiwan in frigate row

4th May 2010, Comments 0 comments

French defence giant Thales said on Monday it had been ordered by a court of arbitration to pay Taiwan hundreds of millions of euros in compensation in a dispute over a warship sale in 1991.

"Thales has been ordered to pay damages and interest," a company spokesman told AFP.

Thales said in a statement that the total sum involved was around 630 million euros (830 million dollars) including interest and that it would appeal the ruling.

The court of arbitration ordered the payments to Taiwan to make up for unauthorised commissions that were paid to help Thomson-CSF, the company that later became Thales, win a deal to sell six frigates to Taiwan in 1991.

The contract governing the deal forbade such payments and stipulated that any illicit commissions would have to be repaid to Taiwan. The contract also said any dispute would be settled by the panel of arbitrators.

Thales must pay 591 million dollars plus interest since August 2001, the Taiwanese navy's lawyer Xavier Nyssen told AFP.

"The preliminary overall estimate is between 800 million and one billion dollars," Nyssen said.

The Thales company spearheaded the sale, but the main stake in the contract was held by the French state-owned shipbuilder DCN. Several sources said the French state would have to pay 70 percent of the penalty.

The French finance ministry and DCN made no comment to AFP on the ruling.

In 2001, French investigating magistrate Renaud Van Ruymbeke launched an inquiry into the massive commissions that were paid in the multi-billion dollar sale of French warships to Taiwan.

During his investigation he received documents suggesting several French public figures had received bribes over the sale of the frigates, documents he concluded were fakes.

Nicolas Sarkozy, now president, was one of those smeared in the documents.

Former prime minister Dominique de Villepin was acquitted in January of having been involved in the attempted smear, but the prosecution has appealed.

© 2010 AFP

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