Chou upheld the release order he gave on Saturday.

Chen was released without bail first before daybreak on Saturday, following an overnight hearing after his indictment on charges of graft and money laundering on Friday.

Prosecutors of the Special Counsel, who indicted the ex-president, his wife and their son and daughter-in-law, appealed Chou's release order to the Taiwan high court Monday.

High court judges remitted the appeal to the district court, where three judges in conference with Chou presiding met for a rehearing.

Special Counsel prosecutors appealed for Chen's continued detention because he might flee Taiwan, collaborate with other defendants, destroy evidence and intimidate witnesses against him.

In particular, they cited Peruvian President Alberto Fujimori as an escapee who lived in Japan after he had been charged with corruption.

Chou pointed out there would be no possibility of Chen's escape in ordering the release of the ex-president.

Six of the Special Counsel prosecutors argued for the continued detention of Chen and his two defense lawyers since 2 p.m.

The prosecution contradicted Chou's claim that Chen was provided with government bodyguards 24 hours a day and his absence without their notice was impossible.

In fact, the prosecutors said, Chen alone visited a 16-year-old boy who claimed to be an expert tarot reader. "No bodyguards were with him," one prosecutor pointed out.

He said Chen is involved in two other scandals.Chiou I-jen, former secretary-general of the National Security Council, was arrested on charges of embezzlement in connection with Chen's secret diplomacy scandal.

At least NT$570 million (US$17.2 million) changed hands as bribes in the financial reform scandal.

Cheng Shen-chih, former chairman of the Mega Financial Holdings Company, and Tu Li-ping, a close friend of former first lady Wu Shu-chen, have been questioned as defendants.

So was Jeffrey Koo, Jr., former vice chairman of the China Trust Financial Holdings who ended life on the lam in Tokyo to return and face prosecutors.

Chen initiated what is known as the second financial reform to halve the number of leading banking institutions, forcing all top bankers to seek his favor in order to survive.

Tu, in particular, was charged with transferring at least NT$740 million (US$22.8 million) in cash from a bank to another bank's safety deposit room. She was also accused of carrying NT$200 million (US$6.15 million) to President Chen's official residence.

These people, the prosecutors argued, may be intimidated if President Chen remains free.

"They may also be coerced to collaborate with Chen Shui-bian to retract what they have testified during the investigation," said Chen Yun-nan, spokesman for the Special Counsel.

Wu Shu-chen is standing trial. She was first indicted on November 3, 2006, charged with borrowing receipts and invoices from friends and relatives to claim a NT$14.8 million reimbursement from a public fund under her husband for the conduct of "affairs of state."

He was not indicted along with her, but was regarded as an unindicted co-defendant who would be formally charged upon leaving office. He stepped down May 20.

During the investigation the Special Counsel launched four months ago, the Chens and their son and daughter-in-law were founded to have misused the "state affairs" fund.

President Chen claimed most of the money, at least US$22 million laundered at two Swiss banks, was a fund for founding a republic of Taiwan. He also alleged some of the slush fund was spent for conducting his secret and personal diplomacy.