TAIPEI - TAIWAN'S ex-intelligence chief has been indicted for allegedly covering up for former president Chen Shui-bian over suspected money laundering, an official said on Thurs.

Yeh Sheng-mao, former director of the Investigation Bureau, faces two-and-a-half years in jail if found guilty of concealing evidence in the case, said Fred Lin, spokesman for the Taipei district prosecutor's office.

'Yeh was a public servant when the crime was committed... As the director he should be in charge of investigating money laundering but he failed to report the documents according to the procedure,' Mr Lin said.

Prosecutors dismissed Yeh's argument that he orally reported the documents apparently implicating the former first family to his superiors and that he neglected the matter due to his busy work schedule.

Yeh's action 'affected the timing of the probe and caused a major impact on the case', Mr Lin said.

Prosecutors raided Yeh's home last week. He has not commented on his indictment.

Yeh, who retired in July after serving more than six years in the post, is the first person to be charged after the island launched a major probe this month into money laundering claims against the Chen family.

Chen Shui-bian, his wife, son, daughter-in-law and brother-in-law have all been named as suspects in the case.

The ex-president has admitted his wife wired US$20 million (S$28.2 million) abroad from his past campaign funds, but said she did so without his knowledge.

He has denied any illegal activity.

According to Taiwanese prosecutors, US$21 million was sent to his daughter-in-law's Swiss bank accounts in 2007 and was used to set up business in the Cayman Islands for suspected money laundering.

Chen, who left office in May, is already being investigated for allegedly embezzling NT$14.8 million in special expenses while president, while his wife is on trial for corruption and document forgery in the same case. -- AFP