During a visit to Chen Yi-chiu, a former national policy advisor, President Chen said it is only natural and convenient for Taiwan to let a private firm handle the arms purchases, the CNA reported.

The CNA quoted "a family member" of Chen Yi-chiu in Kaohsiung as relating his conversation with the president in defense of the controversial company, for the controversial founding of which Gen. Lee Tien-yu quitted as minister of national defense.

If Taiwan tries officially to buy weapons "from a foreign country," the relative of the former national policy advisor quoted the president as saying, it will be greatly "hampered."

The United States may not be that foreign country, for the Taiwan Relations Act says Washington must supply Taiwan with sufficient defensive weapons and equipment.

Taiwan Goal has already contacted a French company to make an arms purchase.

Given that difficulty, President Chen was cited as pointing out, Taiwan had to found a private firm to handle procurement of sophisticated arms.

"Other countries do the same thing," the president said. He did not name those countries, however.

Tsai Ming-hsien is expected to take over as defense minister from General Lee today. Wu Nai-jen, a Democratic Progressive Party heavyweight and a friend of the president's, will quit as board chairman of Taiwan Goal shortly.

Wu said he would call a board meeting this week to disband Taiwan Goal.

With Lee quitting and Taiwan Goal disbanded, the scandal should come to an end, DPP government sources said.

Opposition Kuomintang lawmakers are demanding that Chiou I-jen step down as vice premier to take responsibility for the scandal.

"We don't think they (Kuomintang lawmakers) are serious," one DPP source said. "Lee's head is enough as a sacrifice," he added.

Chiou's resignation won't give the opposition party any help to get its presidential candidate Ma Ying-jeou elected on March 22, the source pointed out.