Taiwan defense minister resigns over weapons flap

By Ralph Jennings

TAIPEI (Reuters) - Taiwan's defense minister resigned on Saturday due to a flap over a state-run firm set up to speed imports of advanced weaponry.

The controversy further tarnishes a presidential administration marred by corruption cases involving family members and aides.

"It was basically an embarrassment for the executive branch, because they violated a lot of rules," said Andrew Yang, secretary general of the China Council of Advanced Policy Studies in Taipei.

"(The resignation) is a sort of damage control."

Taiwan's cabinet accepted the resignation of defense Minister Lee Tien-yu, whose department launched Taiwan Goal, a state-run arms procurement company with a T$1 billion ($31.8 million) investment. The company's activities were also suspended.

"Since Taiwan Goal has been unable to operate and has generated concern from all walks of life, (Lee) feels deep regret and has offered to resign," the Ministry of National defense said in a statement.

Taiwan Goal's purpose was to accelerate weaponry imports that might otherwise be stalled by political wrangling and fears abroad of upsetting China.

Taiwan President Chen Shui-bian seeks to buy advanced U.S. weapons as China aims more missiles at the island. But Taiwan's opposition-controlled parliament has approved only part of a U.S. arms sales bill despite years of debate.

Beijing has seen Taiwan as part of its territory since the end of the Chinese civil war in 1949 and threatened to use force, if necessary, to make it reunite.

Foreign arms suppliers fearful of upsetting China may be more willing to do business with a company than with Taiwan government officials, defense analysts say.

defense officials announced the firm's creation on February 15, sparking loud objections from Taiwan legislators.

Taiwan Goal's business will be suspended indefinitely, a ministry spokesman said.

Tsai Ming-hsien, a former vice defense minister and former deputy Taiwan representative to the United States, was appointed to replace Lee.

Lee, 61, an air force general and former strategic adviser to the president, was appointed minister in May.

The ruling Democratic Progressive Party faces a tough presidential election on March 22. Chen must step down in May due to term limits.

(Editing by Jerry Norton)