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Last Updated: Sunday, 25 June 2006, 07:50 GMT 08:50 UK
Minister backs Bank of Japan boss
Bank of Japan governor Toshihiko Fukui
Toshihiko Fukui says he will donate his profits to charity
Japan's economics minister has rejected calls for the Bank of Japan's embattled governor Toshihiko Fukui to resign.

Mr Fukui has been criticised for his investment links to a fund manager who is under arrest and charged with insider dealing.

Economy and Banking Minister Kaoru Yosano said he understood why many people were angry with Mr Fukui.

But he warned that the governor's resignation could harm the Japanese and global economies.

Mr Fukui saw his investments in a fund run by Yoshiaki Murakami double in seven years to 22m yen ($190,000; 100,000).

Ethical questions

Mr Fukui made the investment before he became the Bank of Japan's governor in 2003.

But questions have been raised about the ethics of holding onto the investment while he held such a prominent public position.

"I understand the public's anger," Mr Yosano said. "But the impact on Japan's economy, the global economy and global financial markets should be considered."

Yoshiaki Murakami holds a media conference in Tokyo
Mr Murakami says he acted unwittingly

He added: "Given that there are some unstable elements in global markets, Japan should not be sending the wrong message."

Mr Fukui has apologised and said he would give any profits he made from the fund to charity.

But opposition politicians have said Mr Fukui was careless in his judgement and called for him to quit.

Insider trading

Mr Murakami has been indicted for alleged violations of Japan's securities laws.

He has admitted he was guilty of insider trading when buying shares in Nippon Broadcasting System in 2005.

He said he bought shares knowing that Livedoor would buy a stake in the firm.

Mr Murakami is then understood to have sold shares to Livedoor, the once high-flying internet business which has become immersed in scandal, through his investment firm MAC Asset Management.

If convicted, Mr Murakami - who said he acted unwittingly - could face up to three years in prison and a fine of 3 million yen ($25,900).

Prime Minister Junichiro Koizumi has backed Mr Fukui, who wants to see out his term which ends in March 2008.

The case comes as the bank appears close to ending its policy of zero interest rates that has lasted for five years.

Indications that the bank could raise rates sooner rather than later have alarmed some analysts who fear it could dampen the nation's economic recovery.


SEE ALSO
Top Japanese fund manager charged
23 Jun 06 |  Business
Bank of Japan boss says 'sorry'
15 Jun 06 |  Business
Scandal rocks Bank of Japan boss
14 Jun 06 |  Business
Bank of Japan 'to raise outlook'
09 May 06 |  Business
Japanese fund chief is arrested
05 Jun 06 |  Business
Japan upgrades economic growth
12 Jun 06 |  Business

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