These “associates” include Vice Premier Chiou I-jen, DPP New Wave faction leader Wu Nai-jen, Chairman Lin Wen-yuan of China Steel Corp. and Tung Ching-hsiung, president of Chunghua System Integration.

They claim they are setting up the arms company without taking any pay. Wu has said he will tender his resignation after the new president assumes office on May 20.

Their company, called Taiwan Goal, was established last month, with Wu as its board chairman. It was designed as a platform to handle national arms management, production and marketing.

The new company, however, has drawn strong criticism. The outgoing administration is widely seen as attempting to set up a pipeline to state coffers in the name of national defense, but without public scrutiny.

While it is a common practice around the world for governments to set up companies to better integrate military resources, there must be mechanism of oversight.

Taiwan Goal has a total of NT$1 billion (US$31 million) in start-up capital, with 45 percent of it coming from the Ministry of National Defense. But the MND doesn’t have the final say on the activities of the company. Furthermore it is beyond the reach of the legislature.

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