(Xinhua)
Updated: 2008-05-06 07:36

Taiwan's "vice premier" quit the ruling Democratic Progressive Party (DPP) on Monday to take responsibility for a diplomatic scandal involving the alleged embezzlement of millions of US dollars.

Chiou I-jen said he would cease all political activities forever on May 20 when the incoming Kuomintang government comes to power.

So far, several of outgoing Taiwan leader Chen Shui-bian's confidantes including Chiou, "foreign minister" James Huang and "vice defense minister" Ko Chen-heng, were found to have been involved in the scandal.

According to local media reports, the funds of US$29.8 million were earmarked in 2006 by Taiwan to secure ties with Papua New Guinea. The funds would be given to the country as economic aid once diplomatic relations were established.

The funds, however, were allegedly taken by Taiwanese businessman Ching Chi-ju and Singaporean Wu Shih-tsai, who acted as intermediaries in the abandoned deal.

Ching was recommended by Chiou, then head of the "national security bureau", to the "foreign minister" James Huang in 2006.

During March and April this year, the Taiwan authority was forced to sue the two businessmen in an attempt to recover the missing money and, at the same time, request Singapore's high court to freeze the joint bank account of the two businessmen.

The scandal surfaced last week when a Singaporean newspaper made it public in a report.

In the past few days, Chiou, James Huang and Ko Chen-heng have been questioned by prosecutors over the case.

Both Chiou I-jen and James Huang acknowledged the diplomatic deal and said they would take the biggest political responsibility.

The scandal has shocked the island.

The Taiwan-based United Daily News (UDN) said in an editorial that the whole story was "hard to believe". It was, in fact, not only a diplomatic scandal, but a general picture of Chen Shui-bian's degenerated "confidante politics" of the past eight years.

Some media reports pointed out that Chen was finding it difficult to escape responsibility for the scandal.

The Taiwan-based China Times said that during the past eight years of Chen's tenure, successive corruption scandals surfaced and had rocked the Taiwan political circle. These cases all involved his confidantes, including his relatives.

And a DPP member demanded that Chen should quit the party for his serious negligence and inevitable responsibility for the diplomatic scandal.