France may have to pay Taiwan US$600 million (476 million euros) in fines because of illegal commissions that massively inflated the price of warships sold to Taipei in 1991, Le Figaro reported yesterday, citing a public prosecutor's office report to Justice Minister Dominique Perben.

The Taiwan government filed a lawsuit in November claiming illicit commission payments breached the terms of the frigate construction contract awarded to Thomson-CSF (now Thales SA) the newspaper reported.

Taipei paid more than FF16 billion (2.44 billion euros) for the six Lafayette class frigates, and judicial investigations have since revealed that around a third of that was spent on a complex lobbying operation to secure the deal run by Thomson.

The report drawn up by the Paris prosecutor's office and handed over to the Ministry of Justice on Jan. 15 warned that France is financially liable because of a clause in the contract that stipulated that if commissions were found to have been paid the amount should be deducted from the sale price.

The public prosecutor's report said France may be liable because it acted as guarantor for the frigate contract, Le Figaro said.

Magistrates Renaud van Ruymbeke and Dominique de Talance, who advised the public prosecutor, are about to make their fourth application to successive governments for the lifting of the official secrets act so they might investigate the illicit commissions paid to secure the contract, the paper said.

Vice Minister Hsieh Wen-ting ( ) yesterday declined to comment on the report, but only said he needed some time to follow the whole situation.

With acknowledgement to Taipei Times.