2 Taiwanese officials resign over Papua New Guinea fiasco

Two senior Taiwanese officials resigned Tuesday over the loss of millions of dollars in a failed attempt to persuade Papua New Guinea to officially recognize Taiwan.

The government said Foreign Minister James Huang and Deputy Premier Chiou I-jen were leaving their posts.

The resignations follow last week's revelations that Taiwan lost $29.8 million in a failed 2006 attempt to establish ties with Papua New Guinea.

The money was intended as economic aid for Papua New Guinea, providing it switched its recognition from rival China.

It was given to two middlemen in 2006 on the assumption they could induce the impoverished Pacific nation to abandon Beijing. The attempt was abandoned after only several months, when Taiwanese authorities concluded they could not convince Papua New Guinea to cross over into the Taiwanese diplomatic column.

One of the middlemen, Ching Chi-ju, has since disappeared, along with the money.

Announcing his decision Tuesday, Chiou said he was deeply sorry for his role in the fiasco.

"I have trusted the wrong people with the Papua New Guinea project and caused great damage and turmoil to the country, so I am resigning from my post," he said.

Huang and Chiou have acknowledged their involvement with the middlemen but denied any criminal wrongdoing. Their homes were searched early Tuesday for evidence linked to the incident.

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

The two sides split amid civil war in 1949. Taipei is fighting a desperate rearguard action to bolster its stable of overseas partners as a way of asserting its claims to sovereignty.

President Chen Shui-bian also apologized for the affair earlier Tuesday, saying it had brought disrepute to Taiwan.

"I am deeply sorry about how the Papua New Guinea project has hurt the image of the country and the government," Chen said.