Huang Cheng-an, 58, an employee of the military-run Chungshan Institute of Science and Technology, was arrested in November 2003 in one of the biggest espionage scandals ever uncovered in the island.

Huang had been in a detention center awaiting trial. But the center was forced to release him earlier this week because a High Court notice ordering his continued custody arrived too late.

Huang was barred from leaving Taiwan, but local newspapers said they believe he has smuggled himself out to the Chinese mainland.

"We deeply regret and apologize for the shortfall in handling the crucial suspect awaiting trial," Fan Kuang-chun, chief secretary to the island's highest judicial body, the Judicial Yuan, told reporters.

The event was the second of its kind in less than a week. Three suspects implicated in a kidnapping case were also mistakenly released, sparking a public outcry.

The defense ministry said Huang had handed over some military technology to Beijing in exchange for an unknown sum.

An initial inquiry found that Huang, a graduate of Taiwan's air force academy, had attempted to conspire with local arms suppliers and Middle East agents to make "smart bombs" for sale to Egypt, the ministry said.

The attempt was abandoned after Huang failed to obtain the crucial technology, it said.

The defense ministry said relevant agencies have taken some damage-control measures after Huang's release but gave no details.

Taiwan and China separated in 1949 after a civil war and remain technically at war.

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