TAIPEI - WHEN Chen Shui Bian left the presidency in May, many Taiwanese expected their former leader to end up in jail for misappropriating official funds.

His conviction appeared only in a matter of time after Chen acknowledged last month that his wife had wired US$20 million (S$29 million) abroad.

The statement spurred authorities to action, trying to determine if the move amounted to money laundering.

But the 57-year-old Chen could yet have the last laugh.

To make their case, prosecutors will have to prove that at least some of the money came from official sources or bribes - not an easy task, legal experts say, particularly because the money trail is very convoluted.

Taiwanese following the case also hope the judiciary, once widely criticised for being too soft on the powerful, will act independently in what is seen as a crucial test for the island's young and rapidly evolving democracy.

Elected in 2000, Mr Chen was popular during his first four-year term, but his image suffered badly during the second when his family and inner circle became embroiled in a series of corruption scandals.

Mr Chen says the funds sent abroad came from unused campaign contributions collected during his two races for Taipei mayor and his two successful bids for president.

Under Taiwanese law, he is free to do with these funds as he sees fit.

'These are personal funds... I have not embezzled any money,' Mr Chen told reporters last month.

His wheelchair-bound wife, Wu Shu-chen, has told prosecutors that she wired the US$20 million in 2007, first to Singapore and then to Switzerland.

The funds were later deposited into the Swiss bank accounts of her son and daughter-in-law, she said.

The circuitous route that the money took has sparked accusations of widespread wrongdoing from some lawmakers in the ruling Nationalist Party, which toppled Chen's Democratic Progressive Party earlier this year.

The Nationalists allege that the Chens may have moved up to US$100 million abroad, the bulk of it from bribes they say Mr Chen received from banking interests.

Prosecutors are investigating the allegations, which Mr Chen has denied.

Ruling party lawmakers also charge that Mr Chen's wife has been made the culprit in the money expatriation case, because as a private citizen, she would escape heavy penalties for official corruption.

Mdm Wu a physician's daughter from southern Taiwan, is already on trial for her alleged role in skimming NT$14.8 million (S$684,000) from a special presidential fund, a case in which Mr Chen is also under investigation.

Taiwan former first lady absent from trial
The former first lady again failed to turn up in court on Friday for the graft case hearing.

Wu asked for a leave of absence hours before her scheduled hearing at the Taipei District Court.

At her only appearance so far, to enter a not-guilty plea, she apparently fainted in the courthouse restroom.

Court officials said they would reschedule Friday's hearing.

In parallel with the graft probe, prosecutors are trying to track down the Chen money trail, working with police forces and financial authorities around the world.

They have already confirmed that Mr Chen and Mdm Wu's daughter-in-law established shell companies in the Cayman Islands, the British offshore tax haven of Jersey, and Mauritius, and used them to move funds to Swiss bank accounts.

Professor Lee Tung Hao of the banking faculty at National Chengchih University in Taipei, said the circuitous routing of the funds raises serious questions.

The Chens 'could have left the funds parked safely in Singapore, but they moved the money around apparently out of fear they might be caught,' he said.

'The many transfers caught the attention of foreign authorities.'

In December 2006, Taiwanese authorities were tipped to possibly suspicious Chen financial activities by the Egmont Group, a joint effort by more than 100 countries to combat money laundering.

But Prosecutor General Chen Tsung Ming said it would not be easy to establish the source of the funds the Chens moved.

'The main difficulty we face is to prove that money being wired abroad came from crime,' he said.

On August 28, the case claimed its first victim.

Yeh Sheng Mao, the former chief of the Justice Ministry's Bureau of Investigation, was indicted for failing to look into potential wrongdoing by Mr Chen after receiving the tip from the Egmont Group.

The case has hurt the image of the Democratic Progressive Party, which faces tense local elections in 2009.

But Mr Chen himself, who has left the party in disgrace, is living up to his longstanding reputation as a relentless fighter, vowing that he will succeed in clearing his name. -- AP, REUTERS