TAIPEI, Taiwan – Taiwanese President Chen Shui-bian yesterday apologized for causing political turmoil that hurt “the nation’s image,” but he denied prosecutors’ allegations that he was involved in embezzling money from a special fund for diplomacy.

The president also refused to resign in his first public comments since prosecutors indicted first lady Wu Shu-chen on embezzlement, forgery and perjury charges on Friday. She was accused of taking $450,000 from a special diplomacy fund in 2002-06.

Prosecutors said Chen could be implicated in the case, but he cannot be indicted as a sitting president.

The graft allegations have re-energized an opposition campaign to topple Chen, who has served for six rocky years and has 18 months left in his term. Thousands of protesters marched in the streets this weekend in Taiwan’s two biggest cities. They honked air horns and carried signs saying, “End Corruption.”

Chen said the accusations announced Friday were painful and felt like a “political death sentence.”

“How can Chen Shui-bian be that kind of person, collecting false invoices to embezzle money?” he said yesterday in an hourlong televised address from the Presidential Office.

He refused calls to resign immediately but said: “If my wife is convicted, then because the prosecutors believe my wife and I act together, I cannot escape. I’m willing to resign before my term is up.”

The president and his family have been dogged by corruption rumors for months, but the latest scandal blew up with Friday’s indictment.

Some 4,000 protesters gathered earlier Sunday to demand Chen’s resignation, and the deafening sound of blaring air horns rose from the crowd marching through downtown Taipei toward the wide boulevard in front of the Presidential Office.

“The prosecutor’s report was crystal clear,” said Tsai Wen-chih, a computer engineer.