- The Washington Times - Thursday, November 16, 2000

A former U.S. envoy to Taiwan has charged in a federal lawsuit that employees of the U.S. mission in Taipei sold American visas in exchange for sex and personal profit.
The accusations are outlined in a whistleblower lawsuit by James C. Wood, former director of the American Institute in Taiwan (AIT), who said more than $5 million in visa fees are missing.
In the suit, filed last month in U.S. District Court in Washington, Mr. Wood said AIT officials illegally sold visas which normally cost $10 for up to $25,000 to people not qualified to receive them. He also said some officials demanded sexual favors from women who sought visas they were entitled to receive.
The suit, supported by an audit conducted by Grant Thornton LLP, said AIT personnel who processed nearly $10 million in visa applications between 1992 and 1995 misappropriated the money, mixed it with income from other sources and "failed to maintain proper financial records" on where the cash had been deposited.
An audit report by Grant Thornton said visa fees were not properly deposited into accounts as required under State Department guidelines. Instead, the report said, the money was "co-mingled with other receipts" and AIT officials kept no records to account for the fee deposits. The report also said that of $9.3 million collected in visa fees between June 1992 and September 1995, auditors were unable to account for $5.3 million.
Mr. Wood, who headed AIT from 1995 to 1997, is seeking repayment of undetermined missing funds and unspecified damages for what he said were "false statements" made to force his resignation.
In his suit, Mr. Wood said AIT officials "knowingly permitted visa personnel in Taipei to illegally sell visas to persons who paid up to $25,000 per visa even though the applicant may not have been qualified for the visa requested." He also said AIT officials "intimidated and extorted female applicants, threatening to deny them visas if they refused to provide sex."
Mr. Wood also said some funds were illegally used to pay servants' fees, gardeners, chauffeurs and swimming pool maintenance.
AIT, under a State Department contract, processes visa applications and performs other commercial and trade-related functions. The private agency was created in 1978 to comply with the Shanghai Communique, an agreement between the United States and China in which the United States is committed not to maintain official government relations with Taiwan.
The agency has annual revenues of $36 million, including $21 million from the State Department. It currently raises about $10 million a year in fees charged for processing visa applications.
Mr. Wood, who ordered the audit shortly after he took over AIT in 1995, said in the suit that agency officials refused to give auditors financial records necessary for the review. He said auditors were told the records had been "eaten by termites."
The State Department has declined to comment on the suit, saying it would be "inappropriate" to discuss the matter further while the court considers a motion brought by State and the Justice Department to dismiss the case.
The government described AIT in its dismissal motion as a government entity that enjoyed sovereign immunity, saying AIT "performs essential foreign relations for the United States."
It said the suit was "brought on behalf of the United States essentially against itself" and the "plaintiff and the defendant are one." It also said AIT was "subject to direct oversight and control regarding its management and operations by the Secretary of State."
The Taiwan Relations Act says AIT is a nonprofit corporation created under the laws of the District of Columbia, which works to "preserve and promote extensive, close and friendly commercial, cultural and other relations" between Taiwan and the United States.
It also says AIT officials are not U.S. government employees. Before career diplomats are posted there, they submit letters of resignation and are automatically rehired when their Taiwan tour ends.
Mr. Wood's attorneys, Bradley Weiss and Paul Lawrence, said that since AIT is a nonprofit corporation, the government's motion to dismiss "reverses long-standing policy and violates U.S. agreements with China requiring that the U.S. government sever relations with Taiwan."
"If AIT is a private entity, then it appears to have misappropriated federal funds and is subject to this suit," Mr. Lawrence said. "If, however, AIT is a government entity, then the State Department has been lying to China for years and is violating the long-standing Shanghai Communique."

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