TAIPEI, June 20, 2012 (AFP) - Taiwan's high court on Wednesday upheld an acquittal of ex-spy chief and right-hand man of jailed former president Chen Shui-bian, who had been charged with embezzling government funds.

The court rejected the appeal by prosecutors against Chiou I-jen, a former chief of the National Security Bureau, who was cleared by a district court last year of pocketing $500,000 when Chen was in office.

Chiou denied the charge, saying the money was used on promoting Taiwan's recognition in the international community.

The ex-president is currently serving a prison term of 17 years and six months for two bribery convictions stemming from his two terms in office between 2000 and 2008.

Chen and family members have been accused in a complex network of cases of sending political donations and secret diplomatic funds abroad, laundering millions of US dollars and taking kickbacks on government contracts.

Chen insists that the legal action against him is a vendetta carried out by Taiwan's current Beijing-friendly government in retaliation for his pro-independence stance while in power.

Taiwan and China split in 1949 after a civil war but Beijing still claims the self-ruled island as part of its territory awaiting reunification, by force if necessary.