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Taipei Twin Towers in peril
Publication Date : 02-03-2013
Taipei Twin Towers, the capital city's long-delayed showcase project, has hit a new snag after a Malaysian-led consortium slated to build the development was disqualified at the last minute. The case has been portrayed as possible fraud by a popular local magazine.
Taiwanese prosecutors are now looking into allegations made in a Next Magazine report that IGB Corp and Mid Valley City, which front Taipei Gateway International Development (TGID), were being investigated in Malaysia.
The report said Bursa Malaysia Derivatives (BMD), a subsidiary of the Malaysian stock exchange, launched a probe after getting a tip-off last December from a law firm acting for Taipei City Councillor Angela Ying.
Publicly listed IGB is one of Malaysia's top property developers. Mid Valley City is an IGB unit.
In October, TGID won the tender for the NT$70 billion (US$2.4 billion) project to build two office towers atop a downtown MRT station that will have a line to Taoyuan International Airport. The site will also link railway lines and metro and bus terminals.
The towers - one 322m tall and the other 243m - will have 1.5 times the combined floor space of Taipei 101, the world's third tallest building.
Construction was expected to finish by 2018.
However, TGID was disqualified after it failed to pay the municipal government a NT$1.89 billion performance bond by February 21. Its NT$130 million deposit was forfeited.
The project, initiated by President Ma Ying-jeou in 2004 while he was still Taipei mayor, suffered four failed bids before TGID won the tender.
Next Magazine, a magnet for whistle-blowers, ran a copy of the letter from C. Chuang Law Office, which acts for Ying, to Bursa Malaysia, in its latest issue on Wednesday.
The letter, which raises questions about TGID's financial strength, noted that it was a newly established company with only NT$77 million in paid-up capital, while the Taiwan branches of IGB and Mid Valley separately had operating capital of NT$500,000. Yet, the consortium was undertaking a project worth NT$70 billion.
"This consortium illegally won the tender," said the letter.
The magazine also published the reply from BMD's corporate surveillance and governance department, in which it asked for more information, including "additional details of offences for which the consortium is being investigated".
Ying confirmed on Wednesday that she had indeed authorised C. Chuang to act for her in the investigation, but insisted she was not "directing" the probe into the Malaysian companies.
The fiasco is a major embarrassment for the administration of Taipei Mayor Hau Lung-pin, who has said that he did not know why TGID could not pay the performance guarantee.
Hau on Monday approved the resignation of metro commissioner Richard Chen, whose department had overseen the tender, but maintained the administration had done due diligence in screening TGID and was thus not responsible for the fiasco.
The municipal government will now negotiate a contract with the second-highest bidder, Taiwan- based BES Engineering Corp.
US$1 = NT$29.60