The Nantou District Court granted prosecutors' request to have Hou, along with a consulting firm executive, taken into custody on suspicion of benefiting contractors of the projects, officials said.

Economics Minister Steve Ruey-long Chen said Hou will be suspended from office, and also relocated two other officials who were released on bail after being questioned.

Hou's work, which includes overseeing the Taiwan Water Company and the Water Resources Agency, will be taken over by Vice Economics Minister Shih Yen-shiang, Chen said.

It has been alleged that Hou fixed the bidding processes for the projects in the government's NT$80 billion water conservation plan.

In one case, Hou instructed that dredging continue at a dam although the mud had already been cleared, according to the United Evening News.

The paper said the investigators' wiretapping of Hou's telephone calls had recorded his order to irrigation officials concerning the dam project.

Prosecutors and agents from the Investigation Bureau Tuesday raided Hou's office at the Economics Ministry and other premises, taking more than 30 people, including the vice minister, in for questioning.

The opposition camp claimed former Premier Frank Hsieh, believed to be Hou's mentor, owed the public an explanation over the vice minister's case.

Kuomintang Legislator Lin Teh-fu said Hsieh should not be running for the ruling Democratic Progressive Party in next year's presidential election as he clearly has problems managing his staff.

Lin said many members of Hsieh's inner circle have gotten into legal trouble.

KMT Legislator Chou Shou-hsun said the DPP also owes the nation an explanation for the involvement of so many government officials in corruption scandals over the past seven years.

The anti-corruption platform on which the DPP was founded has collapsed, Chou claimed.

People First Party spokesman Lee Hong-chun noted water conservation is important for protecting the people from floods, but he accused the administration of misusing the huge budget for the work.

He said his party will demand all government agencies involved in water conservation work to detail the legislature of the use of their funding when the new legislative session opens next month.

DPP Legislator Wang Tuoh said if Hou was really involved in corruption, he had to be punished. "But if he is innocent, his name has to be cleared as soon as possible," Wang added.

He also asked the KMT to stop making "random speculations" concerning the Hou case.

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