Beijing yesterday confirmed the arrest of two Taiwan businessmen suspected of spying for the island in the latest cross-Straits espionage case.

"This incident is true, and the Association for Relations Across the Taiwan Straits has informed the families of the relevant people about the situation," said Li Weiyi, spokesman for the Taiwan Affairs Office of the State Council.

He made the remarks at a regular news briefing in response to recent Taiwan media reports that two businessmen from the island had been arrested in Hunan and Guangdong provinces.

The association is a semi-official organization set up by Beijing to handle cross-Straits exchanges due to the absence of official links.

Li did not give details about the arrest of the two men, surnamed Kuo and Leung. But Taiwan and Hong Kong media have reported in recent weeks that the two were arrested by the mainland's State security departments for allegedly providing military secrets to Taiwan.

According to the news reports, Kuo, 62 and Leung, 59, were from Taoyuan County, just west of Taipei, and were detained on September 7.

They were being held separately in detention centres in Hunan's capital city, Changsha, and in the southern city of Guangzhou, the reports said.

The case has been referred to judicial departments, according to the reports.

The arrests are the latest case involving Taiwan businessmen employed by the island's military intelligence agency to collect military secrets.

Given booming business exchanges across the Straits, more than 1 million Taiwan business people and their families live on the mainland.

Analysts said the incident would not affect Taiwan investors, who had pumped in more than US$43.2 billion into 70,760 projects on the mainland by September.

In another development, the mayor of Taipei, a potential candidate for Taiwan's 2008 "presidential" election, apologized yesterday for irregularities in the use of a special fund, the latest corruption spat to grip the island.

Ma Ying-jeou, also chairman of the main opposition Kuomintang (KMT) and known for his clean image, made the comments a day after prosecutors questioned him.

Ma's aides said the mayor was innocent in the misuse of a special city government fund worth 4.08 million new Taiwan dollars (US$124,000) but that a member of the staff in the mayor's office had used fraudulent receipts for reimbursement.

"I will not need to resign for now as I'm not involved in the case," Ma told a news conference. "But I shall take responsibility for the lack of supervision and I will apologize for that."

More than a week ago, prosecutors charged Taiwan "president" Chen Shui-bian's wife Wu Shu-chen with corruption and forging of documents; and said they had enough evidence to charge Chen, who is immune to prosecution while in office.

Source: China Daily