Funding scandal probe hits Japan's ruling party
Source: Agencies |
January 20, 2010, Wednesday
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Print Edition
Print Edition
PROSECUTORS yesterday widened their probe into a funding scandal embroiling the No. 2 executive in Japan's ruling Democratic Party that could threaten the party's chances of winning a mid-year election, media said.
Stock market investors are watching to see whether the scandal involving Ichiro Ozawa will delay enactment of an extra budget aimed at bolstering the fragile economy, although some analysts said immediate impact on share prices would be limited.
Japanese government bond yields could also face upward pressure if the Democrats tried later to offset any scandal fallout with extra spending despite Japan's massive debt.
The affair has eroded voter support for Prime Minister Yukio Hatoyama ahead of the upper house poll, which the Democrats need to win to reduce dependence on two tiny allies who often differ on policies.
A loss by the ruling coalition could create a parliamentary deadlock and stymie efforts to address deep structural problems caused by Japan's aging, shrinking population.
Japanese media said Ozawa was likely to respond voluntarily to questioning by prosecutors, while investigators had searched the offices of construction firms involved in public works contracts in his constituency in northern Japan.
Ozawa, credited by many with engineering the Democrats' historic election win last August, has come under fire after prosecutors arrested three of his current and former aides on suspicion of improper reporting of political donations.
Japanese media say prosecutors are probing the source of funds and suspect construction firms seeking government contracts were involved. Ozawa has denied any intentional wrongdoing.
Media quoted sources close to the party's kingpin as saying his lawyers would discuss the timing of the questioning.
Hatoyama reiterated his support for Ozawa, saying the party's No.2 leader had been very careful with political funds.
"As his comrade, to believe him when he is insisting on his innocence is fundamental," Hatoyama told parliament.
Ozawa vowed to stay in his post.
Stock market investors are watching to see whether the scandal involving Ichiro Ozawa will delay enactment of an extra budget aimed at bolstering the fragile economy, although some analysts said immediate impact on share prices would be limited.
Japanese government bond yields could also face upward pressure if the Democrats tried later to offset any scandal fallout with extra spending despite Japan's massive debt.
The affair has eroded voter support for Prime Minister Yukio Hatoyama ahead of the upper house poll, which the Democrats need to win to reduce dependence on two tiny allies who often differ on policies.
A loss by the ruling coalition could create a parliamentary deadlock and stymie efforts to address deep structural problems caused by Japan's aging, shrinking population.
Japanese media said Ozawa was likely to respond voluntarily to questioning by prosecutors, while investigators had searched the offices of construction firms involved in public works contracts in his constituency in northern Japan.
Ozawa, credited by many with engineering the Democrats' historic election win last August, has come under fire after prosecutors arrested three of his current and former aides on suspicion of improper reporting of political donations.
Japanese media say prosecutors are probing the source of funds and suspect construction firms seeking government contracts were involved. Ozawa has denied any intentional wrongdoing.
Media quoted sources close to the party's kingpin as saying his lawyers would discuss the timing of the questioning.
Hatoyama reiterated his support for Ozawa, saying the party's No.2 leader had been very careful with political funds.
"As his comrade, to believe him when he is insisting on his innocence is fundamental," Hatoyama told parliament.
Ozawa vowed to stay in his post.
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