CPC Responds to Control Yuan's Censure, Vows to Improve Integrity Governance and Internal Control Mechanisms

(CNA, Taipei, July 8, 2024) The Control Yuan has censured CPC Corporation, Taiwan (CPC) regarding the bribery case involving former Refining and Manufacturing Business Group Executive Vice President Hsu Han. CPC stated this evening that it maintains a zero-tolerance stance towards illegal activities. In response to this incident, the company is confronting the issue internally with deep reflection and has incorporated the lessons learned into a comprehensive review of its corporate governance. Building upon existing reforms, CPC will enhance its integrity governance and internal control mechanisms.

Hsu Han, former Executive Vice President of CPC's Refining and Manufacturing Business Group, was sentenced to 25 years in prison in the first trial for bribery. The Control Yuan stated today that CPC's Refining and Manufacturing Business Group had serious systemic structural problems in its procurement processes, including the leakage of information, procurement cases becoming targets for bribery by senior executives, and the condoning of individuals under investigation, who still received 'A' ratings and generous bonuses. The Control Yuan concluded that CPC's internal personnel management mechanisms had failed, leading to a decline in ethical standards, and therefore censured CPC.

CPC responded in a press release this evening, stating that the case was proactively reported by CPC to the Agency for Corruption Prevention and Investigation for investigation. CPC fully cooperated with the judicial authorities' investigation and, in accordance with regulations, pursued administrative responsibility for relevant personnel involved and referred the case to the Control Yuan for review. CPC has not shied away from the impact of this case on CPC's governance and image. Since 2022, CPC has comprehensively investigated procurement cases involving relevant personnel and implicated vendors, continuously assessing risks and making corrections.

In terms of promoting improvements, CPC stated that it has gradually implemented several system adjustments, including establishing job rotation and substantive proxy systems to reduce the risks of long-term business concentration. CPC continues to strengthen its procurement anti-corruption mechanisms, refining relevant operations in stages from budget allocation and cross-departmental review to procurement case examination. Simultaneously, it has reinforced internal audits and controls, promptly reviewing year-end performance evaluations of implicated personnel and recovering undue gains through public law, such as bonuses, salaries, and retirement benefits.

CPC added that it is promoting integrity awareness campaigns and legal education to deepen personnel's awareness of discipline and ethics. For major engineering projects, a procurement integrity platform has been established to promote the transparency of procurement operations through external supervision mechanisms. Related major risks are also subject to ongoing special audits and investigations to ensure the effective operation of the systems.

CPC emphasized that as a state-owned enterprise, it bears public responsibility, and adherence to the law is merely the minimum standard. CPC will build upon existing reforms to enhance its integrity governance and internal control mechanisms, responding to the expectations of the public with concrete actions. (Editor: Hsieh Chia-chen) 07082024