謙聖國際法律事務所

1. What Constitutes Bid Rigging Under Taiwan's Government Procurement Act?

1.1 Bid Rigging, Sham Bids, and Fraudulent Tender Competition

Bid rigging generally refers to arrangements that improperly interfere with genuine competition in a procurement process. In Taiwan, such conduct may involve coordinated bids, sham bidders, improper agreements between participating companies, or other actions that undermine the fairness of government tenders.

Government procurement procedures are designed to ensure that public contracts are awarded through lawful and competitive processes. When bidders coordinate their conduct to create a false appearance of competition, the arrangement may raise concerns under the Government Procurement Act.

However, not every commercial relationship between bidders, contractors, and subcontractors constitutes bid rigging. It is common for a successful bidder to subcontract certain construction activities after winning a government contract. A subcontracting arrangement does not automatically establish that the parties previously coordinated bids or manipulated the tender. Similarly, the fact that several companies know the same contractor or have engaged in previous business transactions does not, by itself, prove that their bids were fraudulent.

➠Criminal liability depends on the specific conduct, the statutory elements of the alleged offense, and the evidence establishing each defendant's participation.

1.2 Article 87, Paragraph 3: Fraudulent Interference With Tender Results

Article 87 of Taiwan's Government Procurement Act addresses several forms of unlawful interference with procurement procedures. Under Article 87, Paragraph 3, a person who uses fraud or other illegal methods to cause an incorrect result in the opening of bids may face criminal liability. The statutory penalty is imprisonment for up to five years, together with the possibility of short-term detention or a fine of up to NT$1 million, imposed alone or in combination as permitted by law.

The offense requires more than an allegation that a tender involved unusual circumstances. The prosecution must establish the relevant fraudulent or illegal conduct, the required criminal intent, and the statutory connection between that conduct and an incorrect bid-opening result. Where prosecutors allege that companies submitted sham bids merely to satisfy tender requirements, they must prove the alleged arrangement through legally sufficient evidence.

The applicable legal provisions must also be distinguished from other forms of procurement misconduct, including offenses involving agreements to prevent genuine price competition or improper interference with another bidder.

⚠️Determining the correct offense is therefore an essential part of a government procurement criminal defense.

2. Taichung District Court Bid-Rigging Case: Background and Allegations

2.1 The Government Construction Tender and Alleged Sham Bidders

The case examined by the Taiwan Taichung District Court arose from a construction procurement project conducted by a state-owned enterprise. The project budget exceeded NT$14 million. According to the prosecution, an individual referred to in this article as Xiaoyan intended to participate in the tender through Company A.

Prosecutors alleged that Xiaoyan wanted to ensure the procurement process could proceed and improve Company A's chances of obtaining the contract. To accomplish this, she allegedly contacted a contractor referred to as Mr. Chen and asked him to arrange additional bids through Companies B and C. The prosecution maintained that these additional bids were not genuine competitive offers. Instead, they allegedly created the appearance that at least three qualified companies were participating independently in the tender.

Prosecutors further alleged that Xiaoyan provided Mr. Chen with NT$1.42 million to finance the bid bonds for Companies B and C. In exchange, Xiaoyan allegedly promised that Company A would subcontract civil engineering work to Mr. Chen if it successfully obtained the contract. Company A ultimately won the tender.

➠After the authorities received a report concerning the alleged bidding arrangement, prosecutors and investigators began examining whether the tender had been unlawfully manipulated.

2.2 The Subcontractor's Confession and Criminal Charges

During the investigation, Mr. Chen admitted involvement in the alleged bidding arrangement and identified Xiaoyan as the person who had financed and directed the scheme.

His statements became a central part of the prosecution's case. According to his account, Xiaoyan was responsible for arranging the financial support and directing the participation of Companies B and C, while Mr. Chen assisted in carrying out the bidding arrangement. Based on the allegations and supporting materials, prosecutors indicted Xiaoyan and Company A under Article 87, Paragraph 3 of the Government Procurement Act.

The prosecution alleged that the defendants had used fraudulent methods to produce an incorrect result in the opening of bids. However, the central evidentiary issue was whether Mr. Chen's statements could be independently verified.

➠The court therefore examined not only his confession and accusations but also the bidding documents, testimony from the other companies, financial transactions, recorded conversations, and the parties' subsequent business relationship.

3. Can an Accomplice's Confession Alone Prove Bid Rigging?

3.1 Taiwan Code of Criminal Procedure Article 156

An alleged accomplice's confession can be relevant evidence in a criminal investigation, but its reliability must be carefully evaluated.

Article 156, Paragraph 2 of Taiwan's Code of Criminal Procedure provides that a defendant's confession cannot serve as the sole evidence of guilt. The court must investigate other necessary evidence to determine whether the confession is consistent with the facts. When an alleged accomplice makes statements incriminating another defendant, those statements also require careful scrutiny. Courts must evaluate their reliability and whether independent evidence sufficiently supports the accusations.

This is particularly important because an accomplice may have personal interests affecting their testimony. For example, the witness may hope to reduce personal responsibility, shift blame to another participant, resolve a business conflict, or retaliate against someone with whom they have a dispute. The existence of such a possible motive does not automatically make the testimony false. However, it requires the court to examine whether the allegations are consistent, credible, and supported by other evidence.

💡In the Taichung procurement case, this evidentiary requirement became a decisive issue.

3.2 Contradictory Statements and the Need for Independent Evidence

The court identified several inconsistencies in Mr. Chen's statements. During different stages of the investigation, he gave conflicting explanations concerning who had provided the bid bonds for the other companies and who had prepared the relevant bidding documents. These discrepancies affected the reliability of his account of the alleged bidding arrangement.

The court also examined statements from the individuals responsible for Companies B and C. Both stated that their dealings had been with Mr. Chen rather than Xiaoyan.They indicated that they did not know Xiaoyan and had not heard of Company A. This evidence was important because it weakened the alleged connection between Xiaoyan and the companies accused of submitting sham bids.

Although the testimony did not necessarily exclude every possibility of indirect involvement, it did not independently establish that Xiaoyan had arranged or directed those bids.The prosecution therefore faced a significant evidentiary gap.

⚠️Mr. Chen's accusations remained central to the case, but the independent testimony did not sufficiently corroborate his allegations against Xiaoyan.

4. Why Bank Records and Audio Recordings Did Not Establish Guilt

4.1 The NT$1.37 Million Loan and Alleged Bid Bonds

Financial records are often important evidence in government procurement investigations.

In this case, prosecutors presented bank records showing that Xiaoyan had withdrawn NT$1.37 million in cash. They argued that the money was connected to the bid bonds allegedly provided for Companies B and C. According to the prosecution, the total amount required for those bid bonds was NT$1.42 million.

However, Xiaoyan produced an IOU signed by Mr. Chen. The document stated that Mr. Chen had borrowed NT$1.37 million from Company A and had received the full amount in cash. After examining the evidence, the court accepted the IOU as genuine and found that the transaction could reasonably be explained as a loan. The amount of the cash withdrawal also differed from the alleged total bid bonds. The NT$1.37 million withdrawal did not match the NT$1.42 million allegedly required to support the additional bids. Consequently, the bank records did not establish that the withdrawn funds had been used to finance a bid-rigging arrangement.

📢The court's reasoning illustrates an important distinction: evidence proving that money changed hands does not necessarily prove the criminal purpose alleged by prosecutors. A financial transaction must be evaluated in its commercial and documentary context.

4.2 Why the Rㄌecorded Conversation Was Insufficient

The prosecution also submitted an audio recording secretly made by Mr. Chen. The recording was offered as evidence supporting the allegation that Xiaoyan had participated in the procurement scheme.However, after reviewing the conversation transcript, the court found that the discussion concerned construction-related details and project expenses. The conversation did not directly address arrangements for Companies B and C to submit sham bids.

It also did not establish that Xiaoyan had instructed another person to increase the number of bidders artificially or otherwise manipulate the tender.The court therefore concluded that the recording did not sufficiently prove her participation in the alleged offense. This distinction matters because recordings may appear suspicious when viewed in isolation, particularly when the parties are discussing money, contractors, or project arrangements.

➠Nevertheless, the evidentiary value of a recording depends on what the participants actually said and whether those statements establish the elements of the alleged crime.A conversation about construction expenses is not automatically evidence of bid rigging.

5. How Construction Disputes Can Affect Witness Credibility

5.1 Delayed Construction, Contract Termination, and Payment Disputes

After examining the financial records and recorded conversation, the court considered the relationship between Xiaoyan and Mr. Chen. The court requested information from the state-owned enterprise concerning the performance of the construction contract and heard testimony from relevant witnesses. The evidence established that after Company A won the tender, Xiaoyan did subcontract part of the construction work to Mr. Chen. This was consistent with the parties having an actual subcontracting relationship.

However, serious problems later developed during project performance. Mr. Chen fell substantially behind the construction schedule. The delays ultimately contributed to the project owner terminating its contract with Company A. A dispute subsequently arose concerning advance payments, construction expenses, and the settlement of outstanding amounts. The parties' business relationship deteriorated significantly during the negotiations.

➠These circumstances provided important context for assessing the timing and credibility of Mr. Chen's criminal accusations.

5.2 Retaliatory Motives and the Reliability of Accomplice Testimony

The court considered whether Mr. Chen's allegations could have been influenced by the breakdown of his business relationship with Xiaoyan. Because the parties had experienced serious construction and payment disputes, the possibility of retaliatory motives could not be disregarded. The court did not need to establish that Mr. Chen had deliberately fabricated every allegation.

Instead, it evaluated whether his statements were sufficiently reliable to support a criminal conviction, particularly given the inconsistencies and lack of independent corroboration. The existence of a potential retaliatory motive weakened the evidentiary weight of his accusations. When combined with the testimony of Companies B and C, the loan documentation, and the contents of the recorded conversation, the court found that the prosecution had not sufficiently established Xiaoyan's participation in the alleged bidding arrangement.

💡The case demonstrates why courts must consider both the substance of an accusation and the relationship between the person making the allegation and the defendant. A former business partner's testimony may be relevant, but personal conflict can become an important factor in assessing credibility.

6. Burden of Proof and Reasonable Doubt in Taiwan Procurement Cases

6.1 Code of Criminal Procedure Articles 154 and 301

Taiwanese criminal proceedings are governed by the presumption of innocence and the requirement that criminal facts be established through evidence.

Under Article 154, Paragraph 2 of the Code of Criminal Procedure, criminal facts must be established by evidence, and no criminal fact may be found without evidence. Article 301, Paragraph 1 provides that a court must render an acquittal when the defendant's alleged offense cannot be proven. These provisions require the prosecution to present evidence sufficient to establish the charged offense beyond a reasonable doubt. A defendant does not bear the burden of proving innocence merely because an alleged accomplice has made incriminating statements.

Likewise, the presence of unusual financial transactions, a subcontracting relationship, or a disputed commercial arrangement does not eliminate the prosecution's obligation to establish the relevant criminal elements. The court must evaluate the evidence as a whole and determine whether the allegations have been proven to the required criminal standard.

6.2 Why the Court Acquitted the Individual and Company

In the Taichung District Court case, the prosecution relied heavily on Mr. Chen's account of the alleged bid-rigging arrangement. However, his statements contained inconsistencies concerning important details of the bidding process. The individuals responsible for Companies B and C did not establish a direct connection between Xiaoyan and the allegedly coordinated bids. The bank records showed a cash withdrawal but did not prove that the money financed the alleged bid bonds.

The IOU supported an alternative explanation that the transaction was a loan. The recorded conversation concerned construction details and costs rather than the alleged arrangement of sham bidders. Furthermore, the construction dispute and deterioration of the business relationship created a possible motive for Mr. Chen to make accusations unfavorable to Xiaoyan.Considering these circumstances together, the court found that the prosecution had not established the alleged criminal conduct beyond a reasonable doubt.

🧑🏻‍⚖️The court therefore applied the principle that unresolved reasonable doubt must be resolved in favor of the accused. Xiaoyan and Company A were acquitted.

➠The judgment illustrates that even when prosecutors present an accomplice's confession, financial records, and recorded conversations, the evidence must still establish the specific defendant's criminal participation.

7. How Businesses Can Defend Against Bid-Rigging Allegations

7.1 Preserve Procurement, Payment, and Subcontracting Records

Businesses involved in government procurement should maintain clear records of their bidding and contract performance activities.

Relevant documents may include tender announcements, bid submissions, bid bond records, subcontracting agreements, purchase orders, invoices, bank statements, loan agreements, IOUs, construction schedules, and payment records. Meeting minutes, emails, messaging records, and project correspondence may also become important when a commercial dispute later develops into a criminal investigation. These records can help distinguish legitimate commercial arrangements from alleged coordination intended to manipulate procurement results.

For example, a properly documented loan may provide an explanation for a financial transfer that prosecutors initially consider suspicious. Similarly, construction records may establish why two contractors communicated frequently or exchanged payments after a tender was awarded. Businesses should preserve complete and authentic records rather than selectively retaining documents favorable to one side.

⚠️If criminal allegations arise, relevant evidence should be identified promptly and reviewed with legal counsel.

7.2 Examine the Evidence Connecting Each Alleged Participant

A government procurement investigation may involve multiple companies, contractors, employees, and subcontractors. The fact that several parties participated in the same project does not automatically establish that they shared a criminal agreement. A defense should examine the evidence connecting each accused person to the alleged unlawful bidding arrangement.

Relevant questions include who prepared the bidding documents, who supplied the bid bonds, who communicated with the participating companies, and whether the accused person knew of or directed the alleged sham bids.

The chronology of the procurement process may also be important. Evidence concerning events before bid submission should be distinguished from ordinary commercial activities occurring after the contract was awarded. For example, a subcontract entered into after a successful bid may be relevant to the parties' business relationship, but it does not automatically prove a prior criminal arrangement.

➠The prosecution must establish the required connection between the accused person's conduct and the alleged offense.

8. Frequently Asked Questions About Bid Rigging in Taiwan

Bid rigging generally involves improper arrangements that interfere with genuine competition in government procurement. Depending on the conduct, relevant offenses may include fraudulent bidding, sham bids, or other violations under Article 87 of the Government Procurement Act.

An unsupported accomplice accusation is not sufficient merely because the witness claims to have participated in the offense. Courts must carefully examine credibility and corroborating evidence, and guilt must be established beyond a reasonable doubt.

Article 87, Paragraph 3 addresses the use of fraud or other illegal methods to cause an incorrect result in the opening of bids. The prosecution must prove the relevant statutory elements, including the defendant's criminal conduct and intent.

No. The legal outcome depends on the actual arrangement, whether the bids were genuine, and whether the conduct satisfies a specific statutory offense. A business relationship between bidders does not automatically establish criminal liability.

Bank withdrawals may be relevant evidence, but they do not necessarily prove the purpose of the money. Courts must examine the transaction's context, supporting documents, and other evidence before determining whether the funds were connected to unlawful bidding.

A recording may be relevant, but its contents must support the alleged criminal conduct. A conversation concerning construction expenses or project management does not automatically establish a fraudulent bidding arrangement.

It may. Courts can consider whether financial disputes, contract termination, or personal conflicts create possible motives affecting a witness's testimony. Such circumstances must be evaluated alongside the remaining evidence.

Under Taiwan's criminal procedure rules, the court must acquit the defendant if the alleged offense cannot be proven. Reasonable doubt concerning the required criminal elements must be resolved in favor of the accused.

Important records may include tender documents, bid bonds, subcontracting agreements, loan documents, IOUs, bank statements, invoices, construction schedules, meeting records, and relevant communications.

Yes. A lawyer can review procurement records, analyze the alleged statutory violations, examine witness credibility, challenge insufficient evidence, and provide representation during investigation and trial. The available defense options depend on the specific case.

9. Conclusion: Why Accomplice Testimony Must Be Independently Verified

Government procurement disputes can expose businesses and contractors to serious criminal allegations, particularly when a former subcontractor or business partner accuses another party of arranging sham bids.

However, an allegation of bid rigging does not automatically establish criminal liability. The Taichung District Court acquittal demonstrates the importance of evaluating an alleged accomplice's statements against independent evidence.

In this case, the prosecution relied on the subcontractor's accusations, bank records, and a recorded conversation. Yet inconsistencies in the witness's statements, an alternative explanation for the cash transaction, the absence of direct corroboration from the other bidding companies, and the possibility of a retaliatory motive left reasonable doubt. The court ultimately acquitted the accused individual and company because the evidence did not establish the alleged offense beyond a reasonable doubt.

For businesses participating in Taiwan government procurement projects, maintaining complete bidding, financial, and subcontracting records can be essential when a commercial disagreement becomes a criminal investigation.Early legal assistance can help identify evidentiary weaknesses, preserve relevant documentation, and develop a defense addressing the specific elements of the alleged offense.

🧑🏻‍⚖️Chien Sheng International Law Firm provides legal assistance in government procurement, economic crime, and criminal defense matters throughout Taiwan.If you or your company is facing a bid-rigging investigation or criminal allegations under the Government Procurement Act, our attorneys can help evaluate the evidence, explain the applicable law, and develop an appropriate legal strategy.

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