AN ANALYSIS OF THE TAIWAN NAVY MINEHUNTER PROCUREMENT FRAUD CASE

This thesis analyzes the alleged fraud and non-fraud incidents related to the Taiwan Navy (ROCN) minehunter procurement fraud case through the lens of auditability theory. In 2014, the Ching-Fu Shipbuilding Company was awarded a US $1.85 billion contract from the Taiwan Navy to build six minehunters; but, due to Ching-Fu’s loan syndication scandal and contract breach, the Taiwan Navy terminated the contract. This procurement failure hindered Taiwan’s indigenous defense shipbuilding goal and damaged the national interest. In this thesis, a three-part matrix was created to describe the alleged incidents of Taiwan Ministry of National Defense (MND), First Bank, and Ching-Fu’s fraudulent loan activities. The alleged incidents detailed in the investigation report and publicly available resources are aligned with contract management processes, internal control components, and procurement fraud schemes to identify the vulnerable areas. The research findings indicate that the source selection and contract administration phases were the most vulnerable areas. In addition, the control activities component was found to be the most vulnerable internal control component. Furthermore, the four procurement fraud schemes found in this case included a fraudulent financial capital increase, a shell company creation, fraudulent representation, and money laundering. Based on these findings, recommendations are provided to improve the Taiwan military procurement process going forward.

Grantor dc:publisher

Monterey, CA; Naval Postgraduate School

Year dc:date.issued

2019

Author dc:creator

• Huang, Hui-Fen

Advisors dc:contributor.advisor

• Rendon, Rene G.
• Rendon, Juanita M.

Statement dc:rights

• Copyright is reserved by the copyright owner.

Handle dc:identifier.uri

https://hdl.handle.net/10945/62764

OAI identifier oai:identifier

oai:calhoun.nps.edu:10945/62764