Indicted Taiwan party leader defiant after quitting

TAIPEI, Feb 13 (Reuters) A Taiwan prosecutor filed corruption charges against opposition leader Ma Ying-jeou today, prompting Ma to quit his post as party chairman and say he will run for president in the island's 2008 elections.

The indictment of Ma, known for his good looks and clean image, could deal a blow to his Nationalist Party just as its political fortunes appeared to be on the rise.

''Ma Ying-jeou is suspected of misappropriating US 339,000 dollar of special funds, which do not require documentation for reimbursement,'' the high court prosecutor's office said in a statement announcing the indictment.

Ma protested his innocence and vowed to clear his name.

''I respect the law, but there is no way I can accept the accusation of embezzling special government funds,'' he said.

''(I) solemnly declare I'll turn my anger into motivation ... and without reservation I will run in the 2008 presidential election,'' he said, declaring his candidacy for the presidency for the first time.

The charges against Ma come at a time when Taiwan's independence-leaning President Chen Shui-bian has been beset with financial scandals involving his wife, son-in-law and former aides.

The prosecutor accused Ma of putting money from special government funds into his own personal account each month over five years, even though he did not use the money for official purposes.

A spokesman for the Nationalist Party said Ma's party membership would be suspended in accordance with party by-laws, but he could be reinstated later if cleared in court.

A representative of the ruling Democratic Progressive Party (DPP) called on Ma to apologise.

Ma and his party, also known as the Kuomintang (KMT), are considered relatively sympathetic to Beijing, which sees the self-ruled island as part of its territory.

RUN AS INDEPENDENT The prosecutor in mid-November began looking into allegations that Ma diverted money from a special fund that he used during his tenure as mayor of Taipei from 1998 to 2006.

Ma could not run for the presidency as a member of the KMT if he was suspended from the party. Analysts said last week that were this to be the case he could run as an independent with informal backing from the party.

China quietly supports Ma's expected candidacy for the presidential elections, said Hsu Yung-ming, assistant research fellow at the think-tank Academia Sinica in Taipei.

Days after the probe began, Ma said the mayor's office had done its own review of the funds in question and discovered that some expense reimbursements were done improperly. He apologised but said the incident was not an example of corruption.

Ma left the mayoral post at the end of his term in December.

Analysts said the impact of the indictment on financial markets should be limited.

''This will cause only a short hit to the stock market, but what investors are most concerned about will be the cross-strait issues that may be affected from this, and it could dampen investor sentiment,'' said Grand Cathay Securities Assistant Vice President Kevin Yeh.

One forex dealer added that the Taiwan dollar weakened later in the Tuesday session as some interbank dealers covered their short-positions in the US dollar due to the Ma case.

In a separate but similar case, President Chen's wife was indicted in early November for alleged misuse of the presidential office's confidential state affairs fund, and court hearings are under way.

The state prosecution has also said that there is enough evidence to indict the unpopular president, though he cannot be prosecuted while in office.

Reuters DKA GC1726