Man pocketed millions in Taiwan affair

Wu shih-tsai, a man involved in a multimillion-dollar diplomatic fraud concerning Taiwan's failed attempt to establish ties with Papua New Guinea, speaks Saturday, May 3, 2008, in Taipei, Taiwan. Wu said Saturday Taiwan first wired US$29.8 million devoted to the efforts to a joint account held by him and associate Ching Chi-ju, and then it was transferred to Ching's personal account. He said Ching has since been missing. (AP Photo)

TAIPEI, Taiwan—A man involved in a multimillion-dollar fraud concerning Taiwan's failed attempt to lure a diplomatic ally from rival China said Saturday that the missing money was transferred to his associate's private bank account.

Taiwanese officials have publicly apologized for losing $29.8 million set aside for establishing ties with the Pacific nation of Papua New Guinea. The government is suing the two men Taipei hired to negotiate the deal.

The diplomatic bungle underscores the seamier side of the no-holds-barred struggle between Taipei and Beijing to curry favor among potential foreign allies.

Singaporean businessman Wu Shih-tsai told reporters on Saturday that Taiwan first wired $29.8 million to a joint account held by him and associate Ching Chi-ju in Singapore, as the island started talks to establish ties with Papua New Guinea in September 2006.

The money was intended for Wu and Ching to offer as economic aid for Papua New Guinea after the two sides established ties.

However, Taiwan abandoned the project in December the same year. Wu said that Ching told him the deal was off and ordered the money be transferred to his own private account so it could be sent back to Taiwan, according to Wu.

"I took (Ching's) instructions because I had the confirmation that he represented Taiwan (in the diplomatic project)," Wu told a group of reporters Saturday. "I signed and transferred the money to Ching. Whatever he did with the money, I had no control."

Taiwan requested the money back but never received it and is suing the two men in Singapore courts.

Ching disappeared around the time Taipei requested its money back in late 2006. Wu said he stayed in contact and last saw Ching in Shanghai around February this year. He said he believes Ching is still in China.

Wu, who said he is Singaporean and not Taiwanese as originally reported, has been cooperating with Taiwanese authorities in the case. He held a press conference Saturday after the case of the missing millions was made public.

On Friday, Taiwan's Deputy Premier Chiou I-jen and Foreign Minister James Huang both appeared on television to discuss how the government could allow itself to be swindled through its cash-for-diplomacy efforts.

Huang apologized over the affair, saying it was unfortunate it had been revealed.

Taiwan often uses monetary inducements to try to persuade countries to recognize it as a sovereign nation.

Taiwan and China split from amid civil war in 1949, and Taipei is fighting a desperate rearguard action to bolster its stable of overseas partners as a way of asserting its claims to sovereignty. China considers Taiwan part of its territory.

In recent years, Chinese economic enticements have helped reduce the number of Taiwan's allies to only 23, most small and impoverished nations in Latin America, Africa and the South Pacific. China has relations with more than 170 countries.