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Probe into Japan ruling party No.2 scandal widens

JAPANESE prosecutors today widened their probe into a funding scandal embroiling the ruling party's powerful No.2, Ichiro Ozawa, and jolting the government ahead of a mid-year election, media reported.

The funding scandal, which is adding to political uncertainty weighing on investor sentiment, could delay enactment of an extra budget aimed at bolstering the fragile economy.

The affair has also eroded voter support for Prime Minister Yukio Hatoyama's government in surveys ahead of the upper house election, in which the ruling Democratic Party wants to win a majority so they can pass legislation smoothly.

Japanese media said Ozawa was likely to respond voluntarily to questioning by the 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's 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 prosectors are probing the source of funds and suspect construction firms seeking government contracts were involved. Ozawa has denied any intentional wrongdoing.

Ozawa said on Monday he wanted to "cooperate with a fair investigation". Media quoted sources close to the party No. 2 as saying his lawyers would discuss the timing of the questioning.

"Ozawa never said he would not respond," the Asahi newspaper quoted a source close to Ozawa as saying.

Prosecutors have asked Ozawa to come in for questioning voluntarily in connection with his aides' arrests, so he is not legally obliged to do so. But his refusal to do so has sparked harsh criticism from Japanese media and opposition parties.

Ozawa has vowed to stay in his post, but some analysts said it was only a question of time before he had to step down.

"Ozawa may think that he is fighting the prosecutors, but many other people are primarily fighting public perceptions," said Koichi Nakano, a professor at Tokyo's Sophia University.

"I think that sooner or later, Ozawa would have to step down. The question is, in what form? He could become another 'shadow shogun'," he added, referring to Ozawa's penchant for running things from behind the scenes.

Surveys show that a majority of voters want Ozawa to step down from his key post, but his campaign skills are seen as vital to winning a decisive victory in the election.



 

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