Desperate for international support, Taiwan under former president Lee Teng-hui established a secret $100 million fund to buy influence with foreign governments, institutions and individuals, including some in the United States, according to current and former Taiwanese officials.

The fund was the source of multimillion-dollar payments to leaders in Nicaragua, South Africa and Panama, according to senior Taiwanese officials and government reports. It also provided financial support, legal under U.S. law, for U.S. think tanks and Washington lobbyists, they said. Several people now in senior positions in the Bush administration, as well as former Japanese prime minister Ryutaro Hashimoto, were beneficiaries, according to the officials and documents.

The fund operated from 1994 until 2000 under the National Security Bureau, Taiwan's main intelligence agency, with no legislative oversight. Taiwan's new president, Chen Shui-bian, closed the fund following the disappearance of one of its senior accountants, Col. Liu Kuan-chun, who allegedly embezzled $5.5 million.

Liu's whereabouts are not known. But a senior Taiwanese official said he feared Liu fled to China and might still be there, which would provide Chinese intelligence with a potential gold mine of incriminating information.

Details about the fund were revealed in secret documents published in Taiwan and Hong Kong in the last two weeks, touching off a political crisis in Taiwan. Interviews with current and former Taiwanese officials confirmed many of the events detailed in the documents and provided information about additional payments made via the fund.

That Taiwan has used money to win friends and influence people has been an open secret for decades. Its lobbying machine is one of Washington's slickest, outclassing the less practiced attempts by its Communist adversaries from China, who in the 1990s were discovered to have attempted to funnel money to the Democratic Party. Senior officials in Taiwan said they worried that Taiwan has lost its advantage in the struggle for influence now that the documents have been leaked. "People will wonder about our ability to keep things secret," said Bi-khim Hsiao, a former presidential adviser and now a legislator. "This has been a dark week for Taiwan."

The documents and interviews paint the most detailed picture yet of a small country -- 23 million inhabitants -- trying to compete against the diplomacy of the People's Republic of China.

Taiwan was thrown out of the United Nations in 1971 to make way for China; only 28 countries still recognize the island. The United States has had no diplomatic ties with Taiwan for three decades. The fund was established against that background on June 20, 1994, Taiwanese sources said, when Lee brought the National Security Bureau under his control after years of operation outside executive branch management. Lee suggested that Ying Tsung-wen, the bureau's chief at the time, keep the fund hidden from the legislature, sources said.

The fund was divided into seven steering committees. One was the Mingde, or Clear Virtue, committee, responsible for ties with the United States and Japan, Taiwan's most important relationships. Su Chi, a former Taiwanese official in charge of relations with China, confirmed the existence of the group and his participation in its activities.

Su said the group sought to identify influential Americans and Japanese who would be sympathetic to Taiwan's cause. The group helped formulate Taiwan's policy toward Japan and the United States and tried to raise Taiwan's profile there. One former Taiwanese official involved in U.S.-China relations described Taiwan's payments to U.S. academics and former administration officials as "an insurance policy."

"We did not generally believe that you could buy Americans," he said. "And we were very clear about the law," which bans contributions to political campaigns from foreign donors.

The former official said Taiwan regularly funded research by U.S. academics on Taiwan; backed conferences put on by such think tanks as the American Enterprise Institute and the Heritage Foundation; and cultivated relationships in Congress, sending employees of influential legislators on free trips to Taiwan. It did not, he said, attempt to edit U.S. researchers' work or lean on Americans to reach certain conclusions. And, he said, it tried to maintain good relations with people who had been sympathetic to Taiwan while they were in government.

"We know there is a revolving door in Washington," he said. "So we follow the careers of people and hope we can cooperate."

One of the big successes claimed by the secret fund's administrators was then-President Lee's trip to the United States in 1995, which touched off a rapid deterioration of U.S. ties with China and brought Taiwan, China and the United States to the brink of conflict.

Lee's administration cultivated close ties to the Washington-based lobbying firm Shandwick Public Affairs Inc., and its sister firms, Cassidy & Associates and Powell Tate. From Jan. 1, 1995, to Dec. 31, 2000, the firms received $9,818,548 from Taiwan, according to Justice Department records. Taiwanese officials confirmed that half the payments came from Lee's fund and half came from his Nationalist Party through the Taiwan Research Institute.

A spokesman for Cassidy & Associates said the firms assumed "the funding was coming from private sources" via the Taiwan Research Institute. Sources in Taiwan said the research institute is funded almost completely by the Nationalist Party.

Cassidy and the other firms played an important role in lobbying Congress to pressure the Clinton administration to grant Lee a visa to attend a reunion at Cornell University. The trip enraged China, which fired missiles miles into the sea off Taiwan's two main ports. The United States dispatched two aircraft carrier battle groups to the region to signal support for Taiwan.

Lee then used the Mingde group to dispatch a leading industrialist, Peng Run-tzu, president of the Taiwan Transport Machinery Corp. and Lee's personal confidant, to Japan to lobby then-Prime Minister Hashimoto to press the United States for a strong reaction, documents and Taiwanese officials said.

The Mingde committee also used Cassidy to lobby for increased arms sales to Taiwan. Among the Cassidy lobbying team at the time was Carl W. Ford Jr., now assistant secretary of state for intelligence and research. Taiwanese officials said Ford helped fashion a March 1, 2000, letter to then-President Clinton from then-Majority Leader Trent Lott (R-Miss.) suggesting that congressional approval of permanent normal trade relations with China might depend on the Clinton administration's moving "promptly" to approve Taiwan's weapons request.

Ford also testified before Congress, where he was identified as a consultant to the Taiwan Research Institute, in favor of major arms sales, including destroyers equipped with the Aegis radar system, a view that goes further than the current Bush administration. The Mingde group also arranged for Ford to travel to Taiwan in 2000 during George W. Bush's presidential election campaign, documents and Taiwanese officials said.

Ford did not return calls requesting comment.

Last April 24, the Bush administration approved an arms package for Taiwan that included destroyers, anti-submarine aircraft and submarines worth more than $4 billion. It was the biggest military transaction since Bush's father sold 150 F-16 warplanes to Taiwan in 1992.

Documents and Taiwanese government sources also said that Mingde was involved in identifying influential Americans, inside and outside government, and attempting to befriend them. Paul Wolfowitz, currently deputy defense secretary, and Kurt Campbell, a deputy assistant defense secretary during the Clinton administration, were targets of the group, the Taiwanese weekly magazine Next reported.

A Pentagon spokesman said Wolfowitz was aware of no connection with the Taiwan fund. He said he did not raise money from Taiwan when he was dean of the Johns Hopkins University School of Advanced International Studies during the Clinton years.

Taiwanese officials said the fund also paid for research by John Bolton, the current undersecretary of state for arms control and international security, who received $30,000 over three years in the mid-1990s for research papers on U.N. membership issues involving Taiwan. As a senior vice president at the American Enterprise Institute, Bolton supported U.S. recognition of Taiwan as a separate country and its return to the United Nations. Asked about his research during a confirmation hearing in April 2001, Bolton said his work for Taiwan would not affect his ability to objectively handle Taiwan issues, including U.S. arms sales.

Bolton did not return calls requesting comment.

Documents published in Hong Kong's Sing Tao Daily detailed payment in early 2000 of $100,000 to James Kelly, now assistant secretary of state for East Asian and Pacific affairs, for two years at Harvard University for former Japanese deputy defense minister Masahiro Akiyama following Akiyama's forced resignation in October 1998 in a contracting scandal.

At the time, Kelly was the president of the Pacific Forum, a Honolulu-based affiliate of Washington's Center for Strategic and International Studies (CSIS). Jay C. Farrar, vice president and spokesman for CSIS, confirmed yesterday that it received two $50,000 donations in 1999 and 2000 from Peng, given through his Taiwan Transport Machinery Corp., to support Akiyama's fellowship. Pacific Forum sent a check for "approximately $40,000" to Harvard, apparently to pay for Akiyama's fellowship there, Farrar said. Peng also gave Pacific Forum $50,000 in general support, Farrar said.

A State Department spokesman said Kelly declined to comment on the matter. Akiyama, who has denied his tuition was paid by Taiwan, did research on Taiwan's inclusion in a theater missile defense system being developed by Japan and the United States.

A former official said Lee also used the fund to buy friendship in small foreign countries. Lee, he said, dispatched Liu Tai-ying, a senior Nationalist Party official, on missions abroad to search for investments that could be used as fronts for laundering Taiwanese money to its friends.

In interviews, officials acknowledged multimillion-dollar payoffs to a variety of countries, much of it through the slush fund. In 1997, they said, Panama's government received $11 million for hosting Lee. Nicaragua received $10 million to build a pink-and-yellow presidential palace for its president, Arnoldo Aleman, and at least $6 million to build a Foreign Ministry building, they said.

One payment was detailed by Eugene Loh I-cheng, a longtime diplomat in the United States who served as Taiwan's last ambassador to South Africa. Loh said that on June 20, 1994, following Lee's visit to Nelson Mandela's inauguration as South Africa's first black president, his government approved a plan to pay Mandela $10 million. That was the day the fund was established by Lee.

Loh said the payment was made to help the African National Congress repay a $20 million campaign debt. National Security Bureau documents detailed a payment of $11 million, but Loh said he knew of only $10 million, which he handed in small denominations of South African rand to a senior member of Mandela's inner circle.

Loh identified one senior contact as Thomas Nkobi, the governing African National Congress's late treasurer general. Other Taiwanese sources said Thabo Mbeki, South Africa's current president, was also involved in the transaction. Cyril Ramaphosa, the ANC secretary general at the time, denied any knowledge of the deal in an interview last week with the South African Daily Mail and Guardian.

Loh said he believed the payment helped delay South Africa's recognition of China by at least two years, to Jan. 1, 1998.

"South Africa was our last big fish," Loh said in an interview. "We are a little island. We have to hold on to these relations any way we can."

The source of the documents is unclear but speculation is rife -- stretching from the fugitive Col. Liu to opposition leader James Soong to former chiefs of the National Security Bureau. Liu's copying machine was apparently used to reproduce some of the documents, but he is not believed to have had access to such classified material.

Tsai Chao-ming, head of the National Security Bureau, told reporters that the revelations, which included the code names of operations and the names of front companies, have seriously damaged Taiwan's ability to collect intelligence and have placed current operations and the lives of Taiwanese agents at risk.

The Global Times, a state-run newspaper in Beijing, crowed recently that Taiwan's intelligence activities in China were a shambles because of the revelations.

In an attempt to quash the report, Taiwanese prosecutors on March 20 raided the offices of Next magazine, which first published the documents, and seized 160,000 copies of the muckraking weekly. Next got the story out anyway by switching to other printing plants. In the end, more than 300,000 copies were sold, according to editor Peir Woei.

Justice Minister Chen Ding-nan said in an interview that prosecutors were preparing to file indictments against reporters and editors at Next and the China Times, a daily newspaper that obtained similar documents. Their crime, he said, was revealing state secrets. "There is just too much press freedom in Taiwan," he said.

Staff writer Robert G. Kaiser in Washington contributed to this report.

Taiwan's former president, Lee Teng-hui, established a secret $100 million fund to buy influence with foreign governments, institutions and individuals.