Taiwan frontrunner cleared of graft

TAIPEI, Taiwan (Reuters) -- Taiwan presidential candidate Ma Ying-jeou was cleared of all corruption charges on Tuesday, removing a huge obstacle to his opposition Nationalist Party's 2008 election bid as it pushes for closer ties with China.

Frontrunner Ma, a former mayor of Taipei traditionally known for his clean image, was charged in February on suspicion of diverting T$11.176 million ($339,000) in government funds into his personal account every month for about five years.

In July, Taiwan prosecutors pressed additional charges, including breach of trust.

"I think this case was a milestone ruling," a jubilant Ma told a press conference. "I expected the legal system to clear my name."

Ma stepped down as chairman of the Nationalists, who once ruled all China, after he was charged -- but he has always denied wrongdoing and said he would have run for office even if found guilty.

Scores of Ma supporters camped outside Taipei District Court cheered "Come on, Ma Ying-jeou" and waved party flags after the verdict was announced and the stock market briefly rebounded on the news.

"Ma Ying-jeou is innocent as evidence has shown," Song Yao-ming, one of Ma's lawyers, told reporters after the announcement. "We feel happy winning the case."

The Nationalists would also get a lift in the January 2008 parliamentary polls as well as the presidential race, a party legislator said.

"From this verdict, we can see this is a problem with the system, not just Ma's problem," said party caucus leader Tsai Chin-long. "This is justice."

But Lo Chi-cheng, political science department chairman with Soochow University in Taipei, said Ma was not yet out of the woods as there could be an appeal by the prosecution.

"This case is not over," he said.

The prosecution would decide whether to appeal only after reviewing the court's 56-page written decision, a spokesman said. Appeals must be lodged within 10 days.

The case has been closely watched, with analysts saying that his presidency could help thaw Taiwan's icy relations with China.

Ma's faction of the Nationalists, who governed Taiwan through 2000, favors closer ties and more open trade with China, which has claimed sovereignty over the island since the end of the Chinese civil war in 1949 when the Nationalists fled to Taiwan.

China has vowed to bring the island back under mainland rule, by force if necessary.

Ma is running against ruling Democratic Progressive Party candidate Frank Hsieh, who favors more distance from Beijing. Prosecutors are now probing Hsieh for any history of corruption.

The case had shown Ma to be human, said Steve Chen, director of the Conflict Study and Research Centre at Chang Jung Christian University in Taiwan.

"He was portrayed as almost equal to God, like he can walk on water," Chen said. "This (case) will stop that kind of image. He is just one of the people."

Ma's case is one of a recent string in Taiwan involving allegations of improper use of government funds by politicians.

Current President Chen Shui-bian, who must step down in May 2008 due to term limits, faces financial scandals involving his wife, son-in-law and former aides. E-mail to a friend

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