Taipei  - Taiwan prosecutors on Tuesday searched three officials' homes over the misappropriation of 30 million US dollars meant to win diplomatic recognition from Papua New Guinea (PNG).

Prosecutors searched the homes and offices of Vice Premier Chiou I-jen, Foreign Minister James Huang and Vice Defence Minister Ko Cheng-heng.

Prosecutors carried out the search after Wu Shih-tsai, a Singaporean businessman hired to seek recognition from PNG in exchange for 30 million US dollars' aid, showed prosecutors a list of seven names, including Chiou, Huang and Ko, and told how 10 million US dollars was to be distributed among them.

As the diplomatic scandal continues to snowball, some lawmakers said they suspect it was a fraud from the start. ERA TV said prosecutors plan to summon President Chen Shui-bian for questioning.

In a statement on Tuesday, Chen denied participation in the PNG deal and praised Taiwan diplomats' efforts to break out of Taiwan's international isolation.

The scandal allegedly occurred in 2006 when Taiwan was trying to get the Pacific island state of PNG to ditch China and recognize Taiwan in exchange for 30 million US dollars in aid.

Chiou and Ko introduced Ching Chi-ju, who has Taiwanese and US citizenship, and Wu Shih-tsai, a Singaporean businessman, to Foreign Minister Huang.

The pair 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 a working fund for Ching and Wu.

In December 2006, as the talks were making no progress, Taipei decided to halt the talks and get the money back.

But when Taiwan diplomats escorted Ching and Wu to Singapore to withdraw the money, Ching fled from the hotel where he was staying and vanished, so Taiwan diplomats brought Wu back to Taipei to face prosecution.

Taiwan's Foreign Ministry kept the scandal secret until May 1, when Singapore daily Lianhe Zaobao reported that Taiwan was seeking the return of the cash from Ching and Wu via Singapore High Court.

During police questioning in the past few days, Chiou, Huang and Ko claimed innocence, saying they were merely trying to help Taiwan but were fooled by two swindlers.

Taiwan, recognized by 23 countries, has been seeking to win recognition from foreign countries.

China has accused Taiwan of engaging in "dollar diplomacy" to win friends, but Taipei insisted all its foreign aid is offered to foreign governments for cooperation projects. (dpa)