Taiwan Spy Chief Quits Over $200,000 Tax-Free Cigarettes Scandal

Adela Lin

(Bloomberg) -- Taiwan’s intelligence chief quit after accusations that an agent attempted to use President Tsai Ing-wen’s overseas trip to secure some $200,000 worth of tax-free cigarettes.

National Security Bureau Director-General Peng Sheng-chu resigned Monday, hours after the smuggling attempt was discovered upon Tsai’s return from a visit to the Caribbean that included a U.S.-stopover. Tsai said in a Facebook post that the allegations represented unacceptable conduct by government officials and undercut the trip’s diplomatic mission, “leading to ignorance of the achievements of visits to allies.”

The incident created a new political worry for Tsai as she girds for what’s expected to be a difficult re-election fight against Kaohsiung Mayor Han Kuo-yu next year. Han -- the presumptive nominee for the opposition Kuomintang -- has criticized Tsai’s management of the economy over the past three years.

Tsai returned Monday from a visit this month to some of Taiwan’s dwindling list of 17 formal diplomatic partners, including Haiti and St. Kitts and Nevis. China has been luring the democratically run island’s allies away as part of an effort to put pressure on Tsai and her pro-independence Democratic Progressive Party.

Peng, a retired air force general, had occupied the post of intelligence chief since October 2016. He previously served as chief body guard for Tsai’s DPP predecessor, former President Chen Shui-bian.

At least one National Security Bureau official was among 10 suspects under investigation by Taipei District Prosecutors Office in connection with the cigarette-smuggling case, agency spokeswoman Chen Chia-hsiu said Tuesday. The group was suspected of ordering more than NT$6 million worth of duty-free cigarettes -- or about 9,800 cartons -- at Taiwan Taoyuan International Airport and storing them at a warehouse on-site.

Taiwan’s Customs Administration said in a statement that there was an attempt to remove the goods without paying duties by taking advantage of expedited customs clearance for ranking officials.

To contact the reporter on this story: Adela Lin in Taipei at alin95@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Jon Herskovitz

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