The recent murder of Chinese-American author Henry Liu in California has cast a harsh light on this island nation's multifaceted intelligence community and raised questions about the links between Taiwanese intelligence and gangland figures.

A reputed gang leader, one of the Taiwanese suspects, was arrested here in November as part of a crackdown on organized crime. His subsequent disclosures to Taiwanese authorities led to the arrests last week of top Taiwanese intelligence officials. The government, in an extraordinary admission, said they were involved in the murder of the 52-year-old Daly City resident, a critic of the Taiwan government.

The Liu case, officials here say, has gone beyond the realm of simple gangland murder, Asian style, to the point where it is a serious embarrassment to the Nationalist government of President Chiang Ching-kuo. Top Taiwanese leaders are also concerned over the implications for U.S.-Taiwan relations.

Members of Congress are talking about a cutoff of arms sales to Taiwan in retaliation for Taiwan's alleged involvement in the murder.

A 1981 law empowers the president to suspend arms deals with any nation harassing U.S. residents. Although the two countries have not had formal relations since the United States normalized relations with China in 1979, the United States sells about $750 million worth of arms to Taiwan each year.

Today, FBI agents spent six hours questioning alleged gang leader Chen Chi-li. They are also expected to interview his associate, Wu Tun. Both men have been accused by U.S. authorities of participating in the Oct. 15 murder, but Taiwan has refused to agree to extradite the two men. The United States has no extradition treaty with Taiwan.

The government, however, is stressing its intention to cooperate with U.S. investigators.

In the meantime, the arrests of the three intelligence officials in the case have highlighted problems in the various intelligence arms of the government, particularly the Defense Ministry's Intelligence Bureau. That bureau is responsible for conducting what remains of the war with the Communists for the mainland.

The three officials arrested last week were all from that bureau: its chief, Vice Adm. Wang Hsi-ling, who was also the former chief of the Taiwanese intelligence apparatus in the United States; deputy chief Hu Yi-min, and a lower-ranking deputy, Col. Chen Hu-men.

The origins of the Defense Intelligence Bureau date back to the 1920s and 1930s, when the Kuomintang ruled China under Chiang Kai-shek, whose son is Taiwan's president, Chiang Ching-kuo.

Although the bureau is still in charge of intelligence concerning the Communists, its flow of information has slowed to a trickle and its recruiting has fallen short of the intake in previous decades, when frogmen from the bureau routinely penetrated the mainland's defenses.

The bureau's role has been eclipsed in recent years by two other intelligence agencies, the Taiwan Garrison Command and the National Security Bureau. In addition, there is the Ministry of Justice's Investigation Bureau, which conducts anticorruption work and is described by government officials as "the most respected of all the intelligence bodies."

Taiwan's other important intelligence organs are in the military police, the security police, the political warfare department of the military and the social work department of the ruling Kuomintang.

Although the broad divisions of responsibility for these bodies is known, their duties also appear to overlap at times in an ill-defined system of checks and balances.

Many here believe that President Chiang uses the different groups to keep an eye on each other and prevent any one group from building too substantial a power base.

Late last week, Chiang decided to put the Defense Intelligence Bureau -- composed of older hard-line conservatives -- under the command of Gen. Wong Chin-su, the current head of the more prestigious National Security Bureau.

That move was read by one western diplomat as "prima facie" evidence that the National Security Bureau has more influence than the defense intelligence bureau.

Clearly, last week's revelations, which led to the dismissal and arrest of the defense intelligence officials, have angered Chiang, who says he wants the killers punished "no matter what their rank."

Of the eight intelligence organizations inside the country, the Taiwan Garrison Command is the most influential and most feared because it is responsible for domestic surveillance of Taiwanese citizens, according to one political activist who is not a member of the ruling Kuomintang.

"We know that beatings are routine with them because local reporters see it every day in police stations," he said.

In 1981, Chinese-American Prof. Chen Wen-chen, a critic of the Nationalist government's policies, was found dead at National Taiwan University after 13 hours of questioning by the Taiwan Garrison Command. Taiwan authorities have said Chen committed suicide, but critics of the government have speculated that his death was an unplanned accident resulting from harsh Taiwan garrison interrogation methods.

The Liu case has also focused additional attention on the relationship between organized crime and the intelligence community.

To many in Taipei familiar with the practices of the Defense Intelligence Bureau, the possibility of a connection between organizations like the Bamboo Gang and the bureau is no surprise.

Fraternization between the underworld and intelligence officers is commonplace enough that President Chiang issued a special warning one week ago for officers to stop dining with gangsters.

One local reporter said that syndicate shops selling illegal imports from the Communist mainland make no secret of their connections with the security apparatus, and even leave the calling cards of government officials lying around.

"The DIB Defense Intelligence Bureau and Bamboo Gang have a lot in common because both groups started out on the mainland," said one local observer of the political scene.

"They feel they are especially patriotic," the observer added, "and share the same sense of isolation and discrimination here in Taiwan. Everyone is fearful of the Taiwan Garrison Command because they are in direct contact with people on a day-to-day basis, but the work of the DIB doesn't touch us so directly. You get the feeling they don't have much to do anymore."

Liu's own relationship with the Defense Intelligence Bureau is also unclear. This week, Taiwan government sources confirmed that Liu had been acting as a part-time spy for the bureau during regular research trips to China over a four- to five-year period, where he had culled "valuable" information.

Early speculation for a motive in the murder centered on an unauthorized biography of Chiang by Liu that included unflattering references to the president's family.

According to Daly City police, two men, described as Asian in appearance, riding bicycles and wearing hooded sweatshirts, shot Liu twice in the chest and once in the face as he was loading the back of his car about 9:20 a.m. on Oct. 15. Liu's widow, Helen, has said she is convinced he was murdered because of his writings.