Taipei - Taiwan lawmakers on Friday demanded President Chen Shui-bian explain a diplomatic scandal in which Taipei hired two middlemen to negotiate diplomatic ties with Papua New Guinea (PNG) but the pair embezzled the 30 million US dollars without accomplishing the task.

"President Chen Shui-bian was behind this 'secret diplomacy' scandal. Chen has been barring prosecutors to probe his 'secret diplomacy funds' because if you investigate one case, you will open the Pandora's box and expose all other embezzlement crimes by Chen," opposition KMT party lawmaker Chiu Yi said.

Foreign Minister James Huang apologized for the scandal at a news conference Friday and blamed the two middlemen for betraying Taiwan.

The incident is the latest diplomatic scandal involving Taiwan, which is trying to break its diplomatic isolation by launching ties with foreign countries. Currently only 23 countries recognize Taiwan and more than 170 countries recognize China and see Taiwan as a Chinese province.

Due to Taiwan's delicate situation, most of Taiwan's talks on opening ties with foreign countries are conducted secretly and sometimes through businessmen.

Taipei made the attempt to launch ties with PNG, an island state in the South Pacific, because in 1999 PNG, while still recognizing China, signed a joint communique with Taiwan on mutual recognition.

PNG annulled the decision after Mekere Morauta had become prime minister on July 21 the same year.

Taiwan re-started the secret diplomacy talks in 2006 by hiring two Taiwan men - Ching Ch-ju and Wu Shih-tsai - as middlemen to negotiate with PNG.

Ching holds a US passport and Wu is an overseas Chinese from Singapore. They supposedly had good ties with PNG politicians.

Under the deal, Taiwan's Foreign Ministry would send 30 million US dollars intended as aid to PNG to a joint account opened by Ching and Wu in the OCBC bank in Singapore.

Ching and Wu were to withdraw the cash only after talks on establishing diplomatic ties with PNG had succeeded, and had to return the fund to Taipei should the talks fail.

On September 14, 2006, Taiwan's Foreign Ministry remitted 29.8 million US dollars into the bank account - 200,000 US dollars had been deducted from the sum as spending money for Ching and Wu.

At the end of 2006, Taipei was suspecting the pair's loyalty to Taipei and decided to end the talks, thus asking them to return the money, but the pair refused.

Ching fled from a Singapore hotel when Taiwan diplomats tracked him down to take him to the OCBC to withdraw the cash and has vanished. Wu is being detained by Taiwan judicial authorities.

Taiwan's Foreign Ministry had kept the scandal secret until Thursday, when Singapore daily Lianhe Zaobao reported that Taiwan was seeking the return of the cash from Ching and Wu Singapore High Court.

Lianhe Zaobao said Taiwan's Foreign Ministry has applied for an injunction from Singapore High Court to freeze Ching and Wu's bank savings and assets, and has been granted the injunction. (dpa)