TOKYO (Reuters) - Japanese Finance Minister Fukushiro Nukaga was linked to a defense scandal on Thursday, as a former official said the politician had once dined with a contractor who was recently arrested for suspected embezzlement.
Former Vice defense Minister Takemasa Moriya said under oath in parliament that he had been at the dinner with Nukaga and another former defense Minister, Fumio Kyuma, had also dined with the defense contractor.
Nukaga told reporters he had no memory of attending such a dinner and had never accepted entertainment from Moriya or defense contractor Motonobu Miyazaki.
Any widening of the scandal over the contractor's wining and dining of government officials is likely to further complicate Prime Minister Yasuo Fukuda's efforts to restart a Japanese naval mission in support of U.S.-led operations in Afghanistan -- stalled by opposition control of parliament's upper house.
It could also damage Fukuda's ability to implement policies in the face of a divided parliament, analysts said.
Fukuda took power in September after his predecessor quit in the wake of a string of ministerial scandals.
"I think it was Mr Kyuma and Mr Nukaga," Moriya told a parliamentary committee after repeatedly saying he did not want to name politicians who had dined with Miyazaki in case his memory was inaccurate.
"I remember the occasion with Mr Nukaga clearly," he said later, adding that he did not know who had paid for the meal.
Media reports have said Nukaga, a former defense minister who has quit cabinet posts twice in the past over scandals, received cash from the contractor.
Nukaga has said he returned the cash and had no special ties to the firm, but the opposition Democratic party said it would demand the minister testify in parliament.
Fukuda directed enquiries back to Nukaga.
"I really don't know if it is a problem or not," the prime minister said as he left on a trip to the United States. "He himself is a serving minister, so why don't you ask him? I have no intention of asking him any more."
Prosecutors last week arrested Miyazaki, 69, a former top executive of Tokyo-based Yamada Corp, on suspicion that he had embezzled money from the firm's U.S. unit to obtain funds to set up a new company, Japanese media have reported.
Media have also been awash with speculation about a slush fund set up by Miyazaki to court favors.
Moriya has admitted that he played golf more than 200 times with Miyazaki over more than a decade and was treated to meals, trips and gifts. Prosecutors are preparing a case against him for taking bribes, media reports say.
"The most difficult thing for me is that hard-working military personnel may be looked at with suspicion because of what I did," Moriya said in frequently emotional testimony.
The 63-year-old ex-bureaucrat has denied he did favors for Miyazaki, who media said also had ties to U.S. officials.
"If Nukaga had to quit, that would damage Fukuda and make it even harder to enact the new bill enabling the naval mission," said Yasunori Sone, a political science professor at Keio University in Tokyo.
Fukuda's predecessor, Shinzo Abe, abruptly resigned in September after a year plagued by scandals and gaffes that cost him five cabinet ministers, including one who committed suicide.
Voters angry at the scandals and other government bungling handed the upper house to the opposition in a July election.