Taiwan vice premier, foreign minister resign over diplomacy

TAIPEI, May 6 (Kyodo) - Taiwan's vice premier and foreign minister resigned Tuesday over a diplomacy scandal involving the island's failed bid to enlist two secret envoys to give Papua New Guinea tens of millions of dollars in exchange for official diplomatic recognition.

"This morning, I tendered my resignation and Premier Chang Chun-hsiung approved it," Vice Premier Chiou I-jen told a Taipei press conference, citing the scandal and an ongoing investigation as reasons for stepping down.

Taipei prosecutors are probing Chiou for his role in recruiting two businessmen to act as secret diplomatic agents in 2006 to woo the Papuan government with $30 million in Foreign Ministry funds.

Talks on establishing formal ties collapsed later that year and the cash and one of the businessmen vanished.

Foreign Minister James Huang also announced his resignation at a separate press conference after prosecutors raided his home and office earlier in the day.

"I tendered my resignation and it was approved," a teary-eyed Huang said, nearly an hour after Chiou's announcement.

"I should have resigned (earlier) to assume political responsibility but sought to assist the investigation," he said, adding he had worked "overtime" to seek out and provide ministry paperwork pertaining to the case to prosecutors.

Numerous interrogations and raids, including on Chiou's home and office, are part of a widening probe by the Taipei District Prosecutors Office, which banned Chiou from overseas travel Monday after listing him as a suspect in the case.

Chiou said Friday he would "accept the biggest responsibility" for the diplomatic bungle, but he had previously resisted calls to resign because his Cabinet is outgoing with merely two weeks left before the administration of President-elect Ma Ying-jeou is inaugurated.

But mounting pressure Tuesday apparently forced Chiou to change his mind.

"I resign my post to facilitate the legal process," he said. "I hope my innocence will be proven soon."

Chiou has admitted to recommending "unvetted" businessmen Ching Chi-ju and Wu Shih-tsai to Huang to serve as intermediaries for the Foreign Ministry to set up a cash transfer to and talks with Papua New Guinea on formal ties in 2006.

At the time, Chiou was general-secretary of the National Security Council, introducing the "envoys" to Huang on the advice of Vice Defense Minister Ko Cheng-heng, whose home prosecutors also raided Tuesday.

The Foreign Ministry wired $30 million to Ching's and Wu's joint bank account in Singapore for the men to eventually transfer to the Papuan government should the talks culminate in the establishment of formal ties, Huang said.

But the talks fell through and Shih, who reportedly holds a U.S. passport, disappeared, as did the funds, triggering a two-year, hushed probe by Taipei to locate its missing money.

The case came to light last week after the Singapore daily Lianhe Zaobao reported that Singapore's High Court recently granted Taipei's request to freeze the bank account in question.

Wu, who remains in Taipei, claimed Saturday that Ching took all the money. There are unconfirmed reports that he has fled to Japan.

Prosecutors subpoenaed Wu and raided his home Sunday, discovering an encrypted list on his computer of seven officials and businessmen who allegedly accepted kickbacks in the case.

Chiou, Huang, Ko, Ching, Wu are on the list, as are local businessman Wang Kuang-teh and Donald Lee, director of the Foreign Ministry's East Asia and Pacific Affairs Department, according to local media.

All seven have been questioned by prosecutors.

The list suggests that Chiou and Ko accepted $3 million and $2 million in kickbacks, respectively, with the other five men receiving $1 million each, reports said.

Taiwan is known to use "checkbook diplomacy" to secure and maintain diplomatic ties amid efforts by China to lure away the island's official allies with more generous aid and assistance packages.