UPDATE 1-Japan PM's New Minister Hit by Scandal over Racy Bar Bill

Thursday, 23 October 2014 06:32 AM

(Adds new disclosure of Tepco shares, analyst comment)

By Mari Saito

TOKYO, Oct 23 (Reuters) - Japan's new trade minister said on Thursday a political support group spent money at a racy bar, a blow for Prime Minister Shinzo Abe after his cabinet suffered two high-profile resignations over separate funding scandals.

Yoichi Miyazawa, a veteran politician and nephew of a former prime minister, was picked to head the trade ministry on Tuesday after the resignation of his predecessor, Yuko Obuchi, after allegations that her support groups misused political funds.

Justice Minister Midori Matsushima resigned the same day over unrelated allegations of election-law irregularities.

Miyazawa, 64, said he learned from news reports of the 18,230 yen ($170) that the support group spent at the sadomasochism-themed bar in his political district of Hiroshima.

"It is true such expenses were made," Miyazawa told reporters. "But I myself did not go there at all. That's true as well."

Kyodo News said the support group Miyazawa-kai had made the payment on Sept. 6, 2010, labelled "entertainment expense", according to a political finances report.

Abe's first term between 2006-2007 was marred by 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.

Miyazawa's staff also said Thursday the minister owned shares in the de facto nationalised Tokyo Electric Power Co , the operator of the destroyed Fukushima plant that the trade ministry oversees.

While not illegal to hold such shares, it is customary in Japan for politicians to divest them when assuming a cabinet post, especially one that is in charge of restarting idled nuclear plants across the country.

Miyazawa's holding of 600 Tokyo Electric shares is worth more than $1,800 based on the utility's current stock price.

"He has had these for a while ... There is no deep meaning behind them," said one of Miyazawa's aides on Thursday. The aide said she did not know if any decision to sell the shares had been made.

Atsuo Ito, an independent political analyst, said the revelation about the shares would be a distraction for a government already facing difficult decisions.

"Even if it doesn't lead to his resignation, it takes energy away from the administration's difficult policies such as raising the sales tax and restarting nuclear reactors," Ito said.

"The ruling party wants to avoid further resignations ... But this could be a repeat of the first Abe administration that was heavily criticised by the public when he defended his ministers for a long time even after scandals." (Reporting by Mari Saito; Editing by William Mallard and Robert Birsel)

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Thursday, 23 October 2014 06:32 AM
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