TAIPEI - Three Taiwan ministers including the vice premier resigned Tuesday to shoulder responsibility for the island's worst diplomatic scandal involving the alleged embezzlement of 30 million US dollars.

Vice Premier Chiou I-jen was the first to go, followed an hour later by Foreign Minister James Huang. Later in the day the defence ministry announced in a statement Vice Defence Minister Ko Chen-heng had also resigned.

All three had their offices and homes in Taipei raided by prosecutors Tuesday prior to their resignations, and despite standing down each denied embezzling any of the money.

"I am resigning to smooth the judicial investigation of the case and hope it will return me my innocence," Chiou told a press conference.

Chiou has admitted introducing one of two businessmen accused of pocketing the money to Huang.

Separately, Huang also tendered his resignation, which was also accepted by Premier Chang Chun-hsiung.

"I regret the event has caused great damage to the country, and I apologise to the people," Huang told reporters.

"As the foreign minister, I have to take responsibility," he said about an hour after Chiou announced his resignation.

"Vice defence minister Ko Chen-heng tendered his resignation at 3:30pm (0730 GMT), which was approved by the minister," the defence ministry said in its statement.

The scandal surfaced only last week, when Singapore's High Court approved Taiwan's request to freeze the joint bank account of two businessmen who were to serve as "intermediaries" to help Taipei forge ties with Papua New Guinea.

Authorities allege Singaporean Wu Shih-tsai and Taiwanese Ching Chi-ju took the missing 30 million dollars, claims Wu denies.

The whereabouts of Ching, a Taiwan citizen who also has a US passport, is unknown, while Wu has been barred from leaving Taiwan.

The scandal has rocked the island in the last weeks of outgoing President Chen Shui-bian's administration.

Chiou, Chen's right-hand man, said he did not receive any cash.

"I did not receive a penny," Chiou said.

However, "I blame myself for having caused such waves in society and such grave damage to the country," he said.

President Chen said he had ordered judicial authorities to look into the issue.

"The development has tarnished the image of the country, the government and the ruling party (Democratic Progressive Party). I'm deeply sorry for this and apologise to the people," he said.

The scandal dealt another blow to Chen's administration after they suffered severe setbacks in the parliamentary and presidential polls. Chen stands down on May 20 at the end of his second and final four-year term, to be succeeded by President-elect Ma Ying-jeou.

Only 23 nations around the world formally recognise self-ruled Taiwan over China, from which it split in 1949 after a civil war.

Taipei lost its UN seat to Beijing in 1971, and both sides have often used generous financial packages to influence governments -- especially in Africa, Latin America and the Pacific -- to ensure loyalty or persuade them to switch recognition.

In an interview with AFP Tuesday, Ma said "chequebook diplomacy" was hurting both Taipei and Beijing and called for a "ceasefire" in its money-guzzling diplomatic battle between the cross-strait rivals. - AFP/ir