TAIPEI, Taiwan — Two middlemen entrusted with almost $30-million in Taiwanese government funds as part of a secret effort to forge diplomatic relations with Papua New Guinea made off with the money and are refusing to give it back, according to officials in Taiwan.
The scandal has further embarrassed President Chen Shui-bian's administration only 17 days before he is to leave office. It is the latest in a series of financial irregularities involving his wife, son-in-law and political associates that has tarnished his pro-independence Democratic Progressive Party and contributed to its loss to the Nationalist Party in the presidential election in March.
The money's disappearance illustrates the behind-the-scenes inducements, often called dollar diplomacy, used by Taiwan and China in their relentless struggle over diplomatic recognition. In recent years, Taiwan has fared poorly in the contest, reduced to 23 countries — most of them small and impoverished — that accord it recognition. Mainland China has gained recognition from 170, all of which acknowledge Beijing's right to rule over all of China.
Foreign Minister James Huang told Taiwanese reporters that Vice Prime Minister Chiou I-jen, one of Chen's closest aides, handpicked the two men to convey the funds in 2006.
Huang denied that the money was to be used to bribe officials in Papua New Guinea and said it was for a variety of development projects in the tiny South Pacific nation. "This is no so-called dollar diplomacy," he said.
Chiou, who at the time headed Chen's National Security Council, met the men several years ago. Taiwanese officials identified them as Ching Chi-ju, a U.S. passport holder, and Wu Shih-tsai, a Singaporean.
Huang said the ministry tried to keep the fiasco a secret. Taiwanese officials visited Ching's wife in Los Angeles several times, he said, and pleaded with her to try to get him to return the money. When that failed, Taiwanese representatives brought suit in Singapore seeking to freeze the two men's bank account. As a result of the court action, the episode was reported in the Singaporean media and then exploded onto the scene in Taiwan.
Wu is believed to be in Singapore, barred from leaving pending an investigation, according to Taipei's United Daily News. Ching's whereabouts are unknown.