Taiwan asks Switzerland to return $427m in graft case: report

TAIPEI (AFP) - Taiwan has formally asked Switzerland to return US$340 million (S$427 million) in alleged ill-gotten funds linked to a controversial deal to buy French frigates two decades ago, a report said on Tuesday.

Taiwan signed a US$2.8 billion deal to buy six Lafayette-class frigates in 1991, a deal which strained French ties with China at the time and was later found to have been awash with up to US$400 million in bribes.

Swiss authorities have previously agreed to return the money frozen in bank accounts, the Taiwanese Central News Agency reported, citing unnamed sources.

Taiwan's high court in May upheld a ruling sentencing former navy captain Kuo Li-heng to 15 years in prison for taking bribes in the case.

The court ruled that Kuo was an accomplice of arms dealer Andrew Wang, who bribed him to facilitate the deal with France and ordered the pair to return US$340 million in ill-gotten money stored in Swiss banks.

A French judicial probe opened in 2001 to investigate claims that much of the money paid by Taiwan went to middlemen, politicians and military officers in Taiwan, China and France.

Taiwan's highest anti-graft body concluded the same year that as much as US$400 million in bribes may have been paid during the course of the deal.

Allegations of backhanders emerged after the body of Yin Ching-feng, a captain who ran the Taiwanese navy's weapons acquisitions office, was found floating in the sea off the island's east coast in 1993.

Swiss courts later discovered US$520 million in bank accounts held by Wang, who is the main suspect in the case but remains at large.

Kuo was originally sentenced to life in prison by a military tribunal in connection with the frigate deal and two other cases.

He received a reduced 20-year sentence in August and was released earlier this month after serving the term.

Taiwanese prosecutors declined to comment on the report.

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