Taiwan's Vice Premier Under Suspicion in Scandal Over Diplomatic Outreach Funds

TAIPEI, Taiwan, May 5 -- Taiwanese prosecutors announced Monday that Vice Premier Chiou I-jen is suspected of corruption in connection with a diplomatic scandal involving an alleged attempt to defraud the government of nearly $30 million.

Chiou was responsible for choosing two intermediaries who were entrusted with the money in 2006 as part of an attempt to induce the Pacific country of Papua New Guinea to grant diplomatic recognition to Taiwan. Senior officials said the two men hoodwinked the Foreign Ministry and took the money for themselves.

The Taipei district prosecutor's office announced after two interrogation sessions that Chiou is suspected of involvement in the fraud and is barred from leaving Taiwan while an investigation is underway. The office gave no details in its announcement on what role Chiou is suspected of playing.

The Taiwanese government has identified the two middlemen as Wu Shih-tsai, a Singaporean national, and Ching Chi-ju, who holds a U.S. passport. Ching's whereabouts are unknown. Wu, speaking to reporters in Singapore, said Ching had taken control of the money after Taiwan abandoned the negotiations with Papua New Guinea and requested the return of the funds.

Chiou announced Monday that he will resign from the pro-independence Democratic Progressive Party of President Chen Shui-bian because of the scandal, the latest in a series to tarnish Chen's second term. Chiou has been one of Chen's closest aides.

"My role in the scandal has made me deeply ashamed in the face of our nation and our people," Chiou said in a statement. "Aside from assisting with the judicial investigation, I will quit my beloved DPP and withdraw from politics forever after leaving government."

The scandals around Chen helped the Nationalist Party score an overwhelming victory in the March presidential election. The Nationalist president-elect, Ma Ying-jeou, is scheduled to be inaugurated May 20.

Some Democratic Progressive Party members have called on Chen to explain what, if any, role he played in the attempt to recruit Papua New Guinea as an ally. Taiwan and China frequently compete to win over allies by offering financial aid to small countries and, according to numerous reports, bribes to their leaders.