Page last updated at 15:11 GMT, Friday, 2 May 2008 16:11 UK

Taiwan manhunt over missing $30m

Taiwan map

Officials in Taiwan are investigating how $30m (15m) of public money went missing during a failed bid to secure diplomatic ties with Papua New Guinea.

Deputy Prime Minister Chiou I-jen made a televised apology after the case came to light this week.

He said two men hired to broker a deal with PNG vanished in 2006 - along with the money - and were now being hunted.

China regards Taiwan as part of its territory, and the island often courts small nations in a bid for recognition.

'Biggest responsibility'

The Papua New Guinea affair was exposed by the Chinese-language Singaporean newspaper Lianhe Zaobao.

It reported that Taiwan had begun legal proceedings to recover the assets, which were originally deposited in a Singaporean bank account.

The Taipei government, however, now has no idea where the money is.

Mr Chiou apologised on TV for the incident and later pledged to bear the brunt of responsibility.

"I feel very much to blame for such an incident, and I will take the biggest responsibility," he said.

He declined to step down though, saying he has only a short time left in office and therefore his resignation would be "too pretentious".

Long-running rivalry

The Taiwanese Central News Agency reported that the $30m was intended as a deposit for negotiating a "technical aid programme" with the South Pacific nation.

Officials paid the money into a Singapore bank account held jointly by Wu Shih-Tsai, an ethnic Chinese in Singapore, and Taiwan-based Ching Chi-ju, who holds a US passport.

The deal fell through, but the pair have not refunded the money. They are now being sought on charges of embezzlement.

Both China and Taiwan are often accused of using chequebook diplomacy to establish political friendships, especially in the South Pacific, Caribbean and parts of Africa.

The rivalry stems from the Chinese civil war.

After the communist victory in 1949, their defeated foes, the Kuomintang, fled to Taiwan and set up a rival government.

Initially recognised by the UN and many Western governments as the legitimate rulers of China, Taipei lost its status to Beijing during the 1970s.

Beijing now opposes any moves for greater recognition of Taiwan as a separate entity, and fewer than 30 nations have formal diplomatic ties with Taipei.

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