Taiwan has sued a Taiwanese-American man in its latest effort to get back $30 million in diplomatic funds which it says was embezzled by him and his business partner, local media said Wednesday.

Taiwan's government last week filed a civil lawsuit in California against Ching Chi-ju, a US resident, seeking an injunction barring any trading of two lots of land he has transferred to his family, the Central News Agency said.

Ching, born in Taiwan but reported to hold a US passport, was placed on Taiwan's wanted list in 2008 after he, together with business partner Wu Shih-tsai, was accused of embezzling the slush fund.

The duo were entrusted with the money by Taiwan's foreign ministry in 2006 to help forge official ties with Papua New Guinea, a diplomatic ally of China, as both claimed to have good connections with officials there.

Taiwanese authorities suspect both of stealing the cash after it was wired to their joint account by the government.

While the duo have not denied taking the money, they have dismissed charges of embezzlement.

They said they considered the millions to be a commission for their efforts, although the scandal surfaced when it emerged that Papua New Guinea had made no attempt to switch its diplomatic recognition from Beijing to Taipei.

Taiwan's foreign ministry spokesman Steve Shia declined to comment on the report of the Californian lawsuit, but confirmed that the government is keen to get its money back.

"The foreign ministry has been striving to use every legal means to retrieve the money embezzled by the two," he told AFP.

So far, the Taiwanese government has succeeded in recovering $12.9 million, or less than half of the funds allegedly embezzled, he said.

Ching's business partner Wu, a naturalised Singaporean born on Taiwan, was sentenced at a Taipei court earlier this month to three years and 10 months in jail on charges of embezzling the government funds.

The scandal in 2008 brought down then vice-premier Chiou I-jen, foreign minister James Huang and vice-defence minister Ko Chen-heng.

Diplomatic recognition is a big issue in Taiwan, which is formally recognised by only 23 countries as China considers the island part of its territory.