Interior Design Firm's $570 Million Ammunition Deal Collapses: Fumai Fails to Obtain Explosives Export License, MOD Imposes $83.98 Million Penalty

Fumai International, an interior decoration company with a capital of NT$19 million, won the Ministry of Defense's RDX (Haisao Geng) explosives procurement contract worth NT$570 million last year, sparking widespread skepticism. At the time, Defense Minister Koo Li-hsiung retorted, 'Does scrutinizing this company's name help it fulfill the contract?' However, on the 20th, Armaments Bureau Director Lin Wen-hsiang announced that the company had failed to obtain the required export license within the 180-day period stipulated in the contract. By July 6, the company was 36 days late—exceeding the deadline by 20%—meeting the conditions for contract termination. As a result, the bureau confiscated NT$412.3 million in performance bond and imposed a late penalty of NT$427.5 million, totaling NT$839.8 million.

Fumai International is primarily registered for wholesale building materials, interior decoration, and plumbing and electrical repairs. It also holds licenses for chemical raw material wholesale and international trade. Nevertheless, in 2025, it successively won procurement contracts for high-melting-point explosives (HMX) from the Chungshan Institute of Science and Technology and RDX explosive materials from the Armaments Bureau, raising public concerns.

The Armaments Bureau confirmed that due to Fumai's failure to submit the export license, it has imposed the NT$839.8 million penalty and listed the company on the blacklist of poor-performing vendors. Minister Koo repeatedly explained that any company qualified for international trade and capable of obtaining export permits could bid. He emphasized that the bidding specifications for RDX and similar explosive materials have remained consistent over the past 20 years and denied tailoring the criteria for any specific company.

During a report to the Foreign Affairs and National Defense Committee of the Legislative Yuan, legislator Wang Hung-wei questioned whether Koo had previously endorsed the company. Koo clarified that no specifications were customized for any firm. Director Lin Wen-hsiang added that the penalty notice would soon be submitted to the Defense Procurement Office.

Under the procurement rules, bidders must pay a bid bond equal to 3% of the budget amount, and the winning bidder must submit a performance bond of 5%. Failure to provide proof of export license or manufacturer certification results in disqualification and contract termination.

Wang criticized the government, citing past opposition warnings as valid and comparing the incident to a 'restaurant importing rapid COVID tests.' Huang Kuo-chang stated that taxpayer money should not be recklessly spent by the ruling party. Ling Tao further revealed a prior case involving President Lai Qing-te, who, as mayor of Tainan, allegedly awarded a park construction project under similar controversial circumstances.