France to pay 460 M Euro to Taiwan over frigate deal

The French government said on Jun, 22 it would have to pay Taiwan 460 million euros after defence giant Thales lost an appeal over its wrongful payment of commissions on a warship order.

Prime Minister Francois Fillon’s office announced that the state would have to cover 72.5 percent of the massive bill the group now faces after an appeal court threw out its challenge to an arbitration panel’s ruling.

France had guaranteed the “Bravo” contract when it was signed in 1991, and an emergency amendment to the government operating budget will now be sent to parliament in order to settle the matter, an official told AFP.

In April last year an arbitration panel employed by Thales and the Taiwanese navy to settle their differences found that the French firm had wrongly paid commissions to intermediaries to secure the contract.

Thales appealed the private panel’s decision in a civil court, but on July, 22 its complaint was thrown out, leaving it facing a bill of at least $591 million (407 million euros) plus interest and legal fees.

The French defence and electronics firm signed the original contract to supply Taiwan with six Horizon-class frigates in 1991. The deal specifically excluded the payment of sweeteners to go-betweens.

France’s Defence Minister Gerard Longuet said Thales would not appeal the latest ruling, which was based not on a re-examination of the case itself but on the conduct of the arbitration. “At Thales’s demand there will be no higher appeal because frankly this affair is not good publicity,” he told reporters.

by Laurent Thomet (c) 2011 AFP