- The Washington Times - Thursday, November 30, 2000

The U.S. government has asked a federal court to dismiss a lawsuit by the former U.S. envoy to Taiwan, who said employees at the American mission in Taipei sold American visas in exchange for personal profit and sex.

In a motion filed this week in U.S. District Court in Washington, Assistant Attorney General David W. Ogden, head of the Justice Department's civil division, said the U.S. mission known as the American Institute in Taiwan (AIT) was a government "instrumentality" and, as a result, could not sue itself.

"Given that AIT is an instrumentality of the United States, the … complaint amounts to an action by the United States against itself," Mr. Ogden said, adding that the court has ruled that such a suit filed as a complaint is "not justifiable."

AIT was created by the U.S. government in 1979 to manage its relations with Taiwan. The organization began operations after the U.S. government formally recognized Beijing as the sole and legal government of China.

Mr. Ogden argued that while the Taiwan Relations Act established AIT as a nonprofit corporate entity, it was created "for a government purpose and to further governmental objectives, and thereby necessarily is an instrumentality of the United States." He said AIT allowed the government to maintain "official relations" with China and "effective functional relations" with Taiwan.

The State Department, which oversees AIT, has declined to comment on the suit, saying it would be "inappropriate" to discuss the matter further while the court considers the motion to dismiss.

James C. Wood, former AIT director, said in a whistleblower lawsuit meaning he was accusing AIT in the name of the U.S. government that more than $5 million in visa fees was missing. He said AIT officials had sold $10 visas illegally for up to $25,000 to people not qualified to receive them and that some officials demanded sexual favors from women who sought visas they were entitled to receive.

The suit 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 conducted by Grant Thornton LLP ordered by Mr. Wood found that visa fees were not properly deposited into accounts as required under State Department guidelines. Instead, the firm said, the money was "co-mingled with other receipts" and AIT officials kept no records to account for the fee deposits.

Grant Thornton 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.

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 personnel "intimidated and extorted female applicants, threatening to deny them visas if they refused to provide sex."

Mr. Wood, who headed AIT from 1995 to 1997, is seeking repayment of an undetermined amount of missing funds and unspecified damages for what he said were "false statements" made to force his resignation.

AIT, under a State Department contract, processes visa applications and performs other commercial and trade-related functions. The agency has annual revenues of $36 million, including $21 million from the State Department. It raises about $10 million a year in fees charged for processing visa applications.

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