Thu Apr 24, 9:55 AM ET
Ma had been accused of misusing more than 11 million Taiwan dollars (nearly 340,000 US dollars) in expense accounts while he was Taipei mayor between 1998 and 2006, charges he strenuously denied.
He was cleared by a district court last year, and subsequently by the High Court when prosecutors appealed.
In its verdict, the Supreme Court cited the lower court ruling that "the defendant had no intention to swindle money using his position nor engage in fraudulent acts."
"The Supreme Court, after deliberation, rejected the appeal by prosecutors and upheld the verdict of the High Court which found Ma Ying-jeou not guilty of graft and breach of trust charges," said court spokesman Chang Tsun-tsung.
"The expenses were all used for official purposes and Ma did not pocket any money illegally," he added.
Ma, of the China-friendly Kuomintang party, won a landslide victory in the March 22 presidential vote over Frank Hsieh of the pro-independence Democratic Progressive Party (DPP).
He is due to be inaugurated on May 20, succeeding the DPP's Chen Shui-bian who is stepping down after the maximum two four-year terms.
Ma has always insisted he acted just like 6,500 other government officials entitled to special expenses, describing the case as an "ugly tactic" by the DPP to crush his presidential bid.
"We welcome and respect the Supreme Court ruling," his lawyer Song Yao-ming told AFP.
The DPP, in contrast, expressed regret. "We regret the verdict but we are not surprised as Ma is now elected," DPP parliamentary whip Lai Ching-te told reporters.
"Although Ma escaped prosecution, it does not mean he is innocent."
The corruption allegations stemmed from a decades-old system of allotting special funds to higher-ranking government officials. Analysts say the rules governing the funds are vague and full of loopholes.
Lin Feng-cheng, executive director of Judicial Reform Foundation, said the verdict would serve as a precedent for other cases.
"It is the first and most important ruling on such special expense cases involving government officials, and it will become a major reference for the courts to rule on other cases," he said.
The High Court, in delivering its own not-guilty verdict on Ma in December, ruled the funds "should be considered as subsidies to officials, and that Ma was found to have complied to the rules and committed no crime in handling the funds."
Outgoing Vice President Annette Lu and two other leading DPP members -- Yu Shyi-kun, a former party chairman and ex-premier, and former foreign minister Chen Tan-sun -- are on trial on corruption and forgery charges in other cases involving special expenses.
Hsieh, the DPP's defeated presidential candidate, and his running mate Su Tseng-chang were cleared by prosecutors last year of mishandling expenses.
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