Wu said that he will sue the former lawmaker if he cannot prove true and does not retract his remarks and apologize..

The premier challenged Lee Wen-chung, the Democratic Progressive Party (DPP) nominee for the Nantou County magistrate's office in the year- end local elections, to provide evidence to substantiate his allegation that Wu, when he served as a legislator representing Nantou County, had illegal dealings with a former felon during their trip to Bali, Indonesia, late last year.

"If Lee fails to do so in three days, I will file lawsuits against him for slander," the premier said in a press conference.

Lee told reporters Wednesday that, Premier Wu, incumbent Nantou Magistrate Lee Chao-ching, and Chiang Chin-liang, who had served a prison sentence for murder, extortion and arms smuggling, were touring Bali together to settle the gravel business interests of Nantou and contemplate the candidates for the offices of county council speaker and deputy speaker.

The gravel industry has been a lucrative business in Taiwan, and many of the operators in the business are believed to have connection s with local mafia groups.

Chiang, now chairman of the Tsaoyetun Night Market Association in Tsaotun Township, was convicted of murder for slaying a Changhua gangster and a Nantou County council member in 1983 and 1985 respectively. He fled from prison in 1989 during a hospital visit and was recaptured a year later, according to DPP lawmaker Chen Ting-hui.

Chen said that Chiang's rap sheet included more than 30 counts of illegal arms sales, extortion, assault and robbery. He was released from jail on parole in 2000.

Wu said that he first met Chiang in 2003 or 2004 when Chiang was already chairman of the night market association, but "he kept some distance from Chiang" at the time because DPP members were serving as both chiefs of Nantou County and Tsaotun Township.

Wu said he had "a little bit" more contact with Chiang after Lee Chao-ching, a Kuomintang member, became Nantou County chief in late 2005. Lee is now seeking reelection.

"I visited the night markets two or three times to solicit votes when I was campaigning in the 2008 legislative election, and was grateful for Chiang's support," Wu said.

Regarding his trip to Bali, Wu said that he was on a fact-finding tour to check out sightseeing facilities on the island with about 10 other people at the invitation of one of his friend in Nantou, and he paid for his own travel costs.

Wu insisted there was nothing wrong with going on a trip with a convicted criminal who had served his time in prison. "We should give encouragement to those who had committed crimes but are able to begin new lives," he added.

Wu said he has been very consistent in integrity and has never committed any illegal activities since he chose to be in the political arena, and would not allow his image to be maligned.

Wu stressed that during their telephone conversations the previous evening, President Ma Ying-jeou agreed that Wu should publicly address the controversy "in a frank and quick manner." (By Lee Ming-tsung & Bear Lee)