Page last updated at 07:02 GMT, Wednesday, 4 March 2009

Japan opposition hit by scandal

Ichiro Ozawa, news conference at Democratic Party of Japan HQ, Tokyo, 4 March 2009
Japan's opposition is widely expected to win elections this year

Japan's opposition leader Ichiro Ozawa, whose party is favourite to win elections this year, has dismissed calls for his resignation.

Mr Ozawa was speaking the day after a close aide, Takanori Okubo, was arrested in a donations scandal.

Mr Ozawa said neither he nor his aide had done anything wrong.

The opposition has been widely tipped to win elections that must be called by 10 September, as the government struggles to solve economic woes.

Victory would end more than 50 years of almost unbroken rule by the Liberal Democratic Party of Prime Minister Taro Aso.

"I don't have anything to feel guilty about, and my aide acted legally based on the law controlling political funds," Mr Ozawa, leader of the Democratic Party of Japan (DPJ), told a news conference.

Asked whether he planned to resign, he replied: "I'm not taking any action because of this matter."

He described the investigation as "unfair", saying: "I have reported political funds quite openly, so I don't understand at all why the arrest and the probe occurred."

Political paralysis

Takanori Okubo was arrested on Tuesday on charges of receiving illegal political donations from a construction company.

Tokyo prosecutors allege that Mr Ozawa's political funding organization, Rikuzankai, received 21m yen ($216,000) in illegal donations between 2003-07 from two company executives at the scandal-tainted construction firm Nishimatsu Construction Company Limited.

The two executives were also arrested on Tuesday.

Under Japanese law, companies can donate money to political parties but not to individual politicians or their fund-raising groups.

Opinion polls suggest Prime Minister Taro Aso has the support of fewer than one in 10 people, as the economy sinks in its sharpest recession for decades.

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