VZCZCXRO9932
OO RUEHCN RUEHGH
DE RUEHIN #1545 3051009
ZNR UUUUU ZZH
O 311009Z OCT 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0240
INFO RUEHBJ/AMEMBASSY BEIJING 8691
RUEHGP/AMEMBASSY SINGAPORE 7485
RUEHUL/AMEMBASSY SEOUL 9851
RUEHKO/AMEMBASSY TOKYO 0317
RUEHCN/AMCONSUL CHENGDU 2879
RUEHGZ/AMCONSUL GUANGZHOU 1472
RUEHHK/AMCONSUL HONG KONG 0138
RUEHGH/AMCONSUL SHANGHAI 2292
RUEHSH/AMCONSUL SHENYANG 6832
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

UNCLAS TAIPEI 001545 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL TW
SUBJECT: TAIWAN PROSECUTORS DETAIN FORMER PRESIDENT CHEN'S 
TOP ADVISOR CHIOU I-JEN 
 
REF: TAIPEI 0626 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU)  Summary: Former Vice Premier Chiou I-jen today 
(Oct. 31) became the latest Taiwan political figure to be 
detained on alleged embezzling charges.  Chiou was former 
President Chen Shui-bian's top advisor and was a founding 
member of the Democratic Progressive Party (DPP).  Chiou's 
arrest does not help the DPP and comes at a sensitive time as 
Taiwan prepares PRC Association for Relations Across the 
Taiwan Strait (ARATS) Chairman Chen Yunlin's visit next week 
(Nov. 3-7), which the party plans to protest. End Summary. 
 
¶2. (SBU) The Special Investigation Division of Taiwan's 
Supreme Prosecutor's Office apprehended Chiou on October 31 
to prevent him from colluding with other accomplices in a 
case prosecutors uncovered while investigating 
money-laundering activities involving Chen Shui-bian's 
family.  As Secretary-General of the National Security 
Council in 2004, Chiou reportedly lied to Taiwan's Ministry 
of Foreign Affairs (MFA) and requested $500,000 for 
"operation Anya" although the operation had already been 
terminated.  MFA issued Chiou traveler's checks and Chiou 
cashed some of the checks in a casino overseas.  Prosecutors 
suspect Chiou remitted some money into overseas bank 
accounts.  Though unclear, "operation Anya" may involve MOFA 
funds used to support Taiwan's African and Latin American 
allies. 
 
¶3.  (SBU) This is not Chiou's first entanglement involving 
MFA funds.  Last spring, Chiou took responsibility for the 
botched attempt in 2006 to get Papua New Guinea to switch its 
diplomatic allegiance from China to Taiwan (reftel).  Then 
Secretary-General of the National Security Council, Chiou 
introduced middlemen Ching Chi-ju and Wu Shih-tsai to then 
Foreign Minister James Huang.  Taiwan's Ministry of Foreign 
Affairs commissioned the middlemen to negotiate a deal to win 
diplomatic recognition from Papua New Guinea but talks broke 
down and the money vanished. Chiou admitted his involvement 
in the case in which the MFA transferred $30 million to the 
middlemen's accounts in Singapore.  Chiou accepted 
responsibility in the debacle, resigned as vice premier in 
May - before former President Chen's term ended - and quit 
the DPP.  Huang and former Vice Defense Minister Ko 
Cheng-heng, who also was involved in the scandal, also 
resigned from their posts.  While Ching remains at large, the 
Taipei District Court on October 23 sentenced Wu to two years 
and four months in prison for forging bank records and making 
false accusations.  Wu has the right of appeal. 
 
¶4.  (SBU) Chiou's arrest comes as prosecutors appear to be 
closing the net on Chen Shui-bian.  According to local press 
reports, prosecutors plan to wrap up the Chen case in late 
November. 
SYOUNG