Taiwan vice premier listed as graft suspect, restricted from

TAIPEI, May 5 (Kyodo) - Taiwan's vice premier, Chiou I-jen, was listed by Taipei prosecutors Monday as a suspect in a graft case over the island's failed 2006 bid to give Papua New Guinea tens of millions of dollars in exchange for official diplomatic recognition.

"I will cooperate fully with the investigation," Chiou told reporters Monday after leaving the Taipei District Prosecutors Office, which listed Chiou as a suspect and restricted him from leaving Taiwan during a widening probe into the costly diplomatic blunder.

Chiou has admitted fault for enlisting two businessmen for the secret diplomatic mission to give the Papuan government $30 million for formal ties.

One of the businessmen and the funds disappeared and the talks between Taiwan and Papua New Guinea collapsed.

The case has punctuated the risks of throwing cash at foreign governments in exchange for diplomatic recognition, a practice known as "checkbook diplomacy."

Taipei prosecutors have questioned the island's foreign minister and vice defense minister in the case.

Reports say that roughly 10 other "top officials," still unidentified, have also been implicated.

The officials' names are included on an encrypted file lifted by prosecutors Monday after they seized the computer of Wu Shih-tsai, one of the businessmen involved, local media said.

The list names officials who allegedly accepted kickbacks in the case, reports claim.

"Whether this list exists is one matter; whether those on the list were on the take is another matter. Prosecutors should get to the bottom of it," Chiou said Monday.

Chiou said Friday he introduced Taiwanese businessman Ching Chi-ju to Foreign Minister James Huang to undertake the checkbook diplomacy mission in 2006.

Ching in turn brought Singaporean businessman Wu on board to help arrange the cash transfer and meetings between Taipei and Port Moresby.

Speaking to a Taipei press conference Saturday, Wu said Vice Defense Minister Ko Cheng-heng recommended Ching to Chiu, while Wu and Ching had met in Palau, where Wu ran a hotel.

At Chiou's behest, Huang transferred $30 million in Foreign Ministry funds to Ching's and Wu's joint bank account in Singapore, with instructions to eventually pass the money on to Papua New Guinea, Wu said.

But after the talks on establishing formal ties fell through in 2006, Ching wired the money out of Singapore to his personal account and disappeared, Wu claimed.

The case first came to light last week when Singapore daily Lianhe Zaobao reported that Singapore's High Court recently granted a request by Taiwan's Foreign Ministry to freeze the Singapore account amid a secret, long-term bid by Taipei to locate its missing money.

Ching's whereabouts are unclear, while Wu has also been banned from leaving Taiwan, where he reportedly holds citizenship.

Taiwan's grey and sometimes sensitive diplomatic status often leaves the island little choice but to seek backdoor channels and other unorthodox methods to interact with foreign governments.

That sensitivity stems from China, which views Taiwan as part of its territory and seeks to squeeze the self-ruled island's diplomatic space by persuading its allies through checkbook diplomacy to sever ties and recognize Beijing instead.

Taipei also resorts to checkbook diplomacy in a losing battle to secure and maintain diplomatic allies.

Currently, Taiwan enjoys official ties with just 23 countries, mostly developing countries in the South Pacific, Caribbean, Africa and Central America.