October 19, 2014 / 9:29 PM / 3 years ago

Japan METI minister expected to resign in blow to PM Abe: media

TOKYO (Reuters) - Japan’s new trade and industry minister was expected to resign on Monday, domestic media said, over allegations that her support groups misused political funds, dealing a blow to Prime Minister Shinzo Abe as he faces tough policy decisions including whether to raise an already unpopular sales tax.

Japan's Economy, Trade and Industry Minister Yuko Obuchi arrives at Prime Minister Shinzo Abe's official residence for a meeting with Abe in Tokyo October 20, 2014. REUTERS/Issei Kato

Yuko Obuchi, 40, the daughter of a prime minister and tipped as a future contender to become Japan’s first female premier, was one of five women appointed by Abe in a cabinet reshuffle less than two months ago. The appointments were intended to boost his popularity and show his commitment to promoting women as part of his “Abenomics” strategy to revive the economy.

As head of the powerful Ministry of Economy, Trade and Industry (METI), Obuchi, a telegenic mother of two, was tasked with selling Abe’s unpopular plan to restart offline nuclear reactors to a public worried about safety after the March 2011 Fukushima nuclear disaster.

NHK public TV said on Monday that Obuchi would unveil the results of an investigation into her groups’ funds use on Monday and meet Abe to tell him her decision to resign. NHK said Abe would accept her resignation and start looking for a successor.

The departure would be the first cabinet resignation for Abe, who took office in December 2012 for a rare second term, promising to revive Japan’s stalled economy and strengthen its security stance to cope with challenges such as a rising China.

Abe’s first stint as prime minister in 2006-2007 was marred by scandals among his ministers - several quit and one committed suicide. Abe himself resigned after just one year in the face of parliamentary deadlock, sliding support rates and ill health.

His current government had been little touched by scandal until the cabinet rejig.

OPPOSITION TAKE AIM

The Obuchi affair comes as Abe must decide by year-end whether to proceed with a planned but unpopular hike in the sales tax to 10 percent, after a rise in April to 8 percent pushed the world’s third-largest economy into its deepest quarterly slump since the 2009 global financial crisis.

Support for Abe has begun to sag, falling 6.8 percentage points to 48.1 percent in a weekend survey by Kyodo news agency from last month. Nearly two-thirds opposed a second tax hike and almost 85 percent said they didn’t feel the economy had recovered.

Media reports of funding irregularities emerged on Thursday. On Saturday, NHK said two Obuchi political groups spent 43 million yen (400,000 U.S. dollars) on annual theater events between 2009 and 2011 and kept no record of spending on the 2012 event.

Another political funds group bought 3.8 million yen worth of goods from businesses run by her sister and brother-in-law over the four years through 2012, NHK said.

Obuchi told parliament she believed her supporters had paid for the theater events themselves but was aware it would be a legal violation if her political groups made more payments.

“I feel that ignorance is no excuse,” she said on Friday.

Abe had hoped the soft-spoken Obuchi would be able to ease opposition to atomic power, but political analysts say the controversy could hamper Abe’s plan to reboot reactors, opposed by more than 60 percent of voters in the Kyodo survey.

Abe’s ruling coalition has a hefty parliamentary majority, the opposition is fragmented and no general election need be held until 2016, but the opposition Democratic Party has taken aim at new ministers in debates to try to dent Abe’s popularity.

The Democrats on Friday filed a criminal complaint against Justice Minister Midori Matsushima, accusing her of violating the election law by distributing paper fans to voters. The party has demanded that she resign. Defence Minister Akinori Eto has faced questions from the opposition over his political funds.

(1 US dollar = 107.1800 Japanese yen)

(The story was refiled to drop an extraneous word in tenth paragraph and to add the dollar conversions)

Editing by Eric Walsh

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