October 27, 2014 / 6:03 AM / in 3 years

Japan trade minister got funds from foreign-owned firm, returned

TOKYO (Reuters) - Japan’s new trade and industry minister received contributions from a firm in which foreign investors held a majority stake, but was not aware of the possible violation of the political funds law at the time and has returned the money, an aide said on Monday.

Japan's new Economy, Trade and Industry Minister Yoichi Miyazawa attends a group interview at his ministry in Tokyo October 23, 2014. REUTERS/Issei Kato

It was the latest whiff of scandal for Prime Minister Shinzo Abe’s cabinet and another blow for Yoichi Miyazawa, who has been in charge of the Ministry of Economy, Trade and Industry for less than a week but was already under fire over funding-related improprieties.

Last week, two ministers including Miyazawa’s predecessor, Yuko Obuchi, quit over the possible misuse of political funds. The justice minister also resigned over a separate minor possible legal infraction, although she denied any wrongdoing.

“He (Miyazawa) did not have any idea at the time” that foreign investors had a majority stake in the firm, the aide said, adding that the money, a total of 400,000 yen ($3,700) received in 2007-2008, had been returned.

Japanese law prohibits politicians from accepting donations from foreigners or firms that are more than 50 percent owned by foreigners. Seiji Maehara, who was foreign minister in an opposition Democratic Party-led government, had to resign in 2011 for receiving political donations from a foreign national.

“He has returned all the money immediately after realising what happened...I think this is an appropriate way to deal with this situation,” Chief Cabinet Secretary Yoshihide Suga told reporters, rejecting suggestions Miyazawa’s problems were creating a headache for the government.

Miyazawa’s financing reports have been scrutinised since he acknowledged last week that an aide spent 18,230 yen at an S&M-themed bar, and that he himself held 600 shares in Tokyo Electric Power CO (9501.T), the operator of the tsunami-hit Fukushima nuclear plant that his ministry oversees.

Ministers typically divest themselves of shares in firms they oversee before taking their posts, but are not allowed to buy or sell them after assuming their positions. Miyazawa has said he would put the shares in a trust and that owning them would not affect his policies toward the utility.

The reports have dented Abe’s support ratings, although they are still at around 50 percent, and are complicating a decision he must make by year-end on whether to proceed with a planned but unpopular rise in the sales tax to 10 percent from October 2015 despite worries about the impact on economic growth.

Abe’s first term between 2006 and 2007 was marred by a string of resignations, a pension records scandal and a minister’s suicide that eroded his support. Eventually, he quit in the face of parliamentary deadlock and ill-health, although experts are not presently predicting a re-run of that scenario.

Reporting by Linda Sieg and Antoni Slodkowski; Editing by Raju Gopalakrishnan and Alex Richardson

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