Would be Taiwan leaders both dogged by legal woes

TAIPEI, Aug 1 (Reuters) Taiwan ruling party's presidential candidate breathed a sigh of relief after a court acquitted three former subordinates of graft, but the main opposition contender faces corruption charges and is braced for the worst.

The two are standing for election in March 2008 on an island which is recognised by only two dozen mostly poverty-stricken countries around the world compared to 170 for its giant neighbour China which claims self-ruled Taiwan as its own.

Frank Hsieh, of the ruling Democratic Progressive Party (DPP), welcomed the acquittal of the three officials in a corruption trial concerning construction of a subway project in the southern city of Kaohsiung, where he was formerly mayor.

''It proves my innocence,'' Hsieh said in an interview with cable news network Sanlih, even though his woes are not over.

Taipei prosecutors are investigating Hsieh and other DPP political heavyweights for their use of special funds while acting as government officials.

While Hsieh takes a breather from his troubles, Taipei District Court is scheduled to deliver its verdict on Ma Ying-jeou, the standard-bearer of the island's main opposition Nationalist Party who is charged with corruption, on Aug. 14.

Ma has pleaded not guilty to charges he misappropriated T million (US335,000 dollar) from a special fund over five years during his tenure as mayor of Taipei from 1998 to 2006.

In June media surveys showed Ma ahead of Hsieh, but analysts say the presidential elections are highly unpredictable.

Ma has said he will not withdraw his presidential bid if convicted. He was once known for his clean image and his indictment sparked accusations of a political persecution. In a surprise move, Taipei prosecutors pressed additional charges of breach of trust and fraud against Ma yesterday.

Ma favours closer economic ties with China, which insists Taiwan must return to the fold, by force if necessary.

Hsieh was widely seen as a moderate compared with independence-minded President Chen Shui-bian, who has tested China's patience and upset the United States by pushing the envelope on formal statehood for the island.

But that perception was undermined when Hsieh pledged in the interview to make Taiwan a ''normal country'' if he was elected.

Hsieh promised to change the island's official name to ''Taiwan'' from ''Republic of China'' and adopt a new constitution within five years of taking office -- a move certain to rile Beijing and alarm Washington.

China has claimed sovereignty over democratic Taiwan since their split in 1949 at the end of the Chinese civil war. The United Nations ousted Taipei in favour of Beijing in 1971 under a ''one China'' policy which the DPP has rejected.

The United States switched diplomatic recognition from Taipei to Beijing in 1979, but is obliged by the Taiwan Relations Act to help the island defend itself.

China's parliament passed the Anti-Secession Law in 2005 mandating war if the island formally declared independence.

Hsieh's pledge was in line with a DPP plan to pass a ''normal country resolution'' calling for a name change and barring a change in Taiwan's political status without a referendum.

He returned home on Monday from a trip to the United States where he appeared to have had little success in obtaining Washington's blessing.

REUTERS RN RN1437