TAIPEI, Jan 20 (AFP) - Taiwan Wednesday dismissed as "groundless" a report linking the brother of Romania's president to smuggling obsolete Taiwanese arms.

Taipei-based Next Magazine reported that Mircea Basescu, brother of President Traian Basescu, was suspected of assisting in redirecting the weaponry to groups in Africa and the Middle East accused of terrorism.

The arms landed up with Hezbollah in Lebanon and Angola's Front for the Liberation of the Enclave of Cabinda after 1,800 tonnes of grenades, smoke bombs and landmines had been sent to Bulgaria for destruction, Next reported.

Calling the report "groundless," the defence ministry said the Taiwanese ammunition was destroyed in Bulgaria in 2009 by Explomo Technical Services, a Singapore-based firm.

"The report is based on speculation and there is no evidence to support its claims," said ministry spokesman Yu Sy-tue.

"However, we will look into the matter and seek compensation if there is new evidence indicating that our contractor has violated the contract," he told AFP.

Next said President Basescu had rejected reports on the case in the Romanian media, while his brother had denied involvement in handling Taiwanese ammunition destined for destruction.

Romania has no diplomatic representation in Taipei. The Romanian embassy in Beijing was not immediately available for comment.