Q+A-Japan PM Hatoyama may survive funding fallout

Wed Nov 25, 2009 3:29am EST

(For more on Japanese politics click on [ID:nPOLJP])

By Isabel Reynolds

TOKYO Nov 25 (Reuters) - A former aide to Japan's prime minister may soon be charged with falsifying political funding records, media reports say, a development that could damage the government ahead of a 2010 election for parliament's upper house.

Here are some questions and answers about the allegations that have dogged Prime Minister Yukio Hatoyama since before his Democratic Party toppled the long-ruling Liberal Democrats in an August election for the more powerful lower house.

WHAT IS HATOYAMA'S FORMER AIDE SUSPECTED OF DOING?

The secretary, who was dismissed after the allegations came to light, is suspected of having altered records to make cash funnelled from Hatoyama's own family fortune look like donations from individuals. [ID:nT323725]

A report in the Yomiuri newspaper said one of the groups that handles funds for Hatoyama also failed to declare donations from his mother and sister. The sums involved add up to more than 400 million yen ($4.53 million), the Nikkei newspaper said on Wednesday.

The maximum penalty if an offence were proved would be five years in prison or a fine of up to 1 million yen, Japanese media say. No evidence has been found that Hatoyama himself was directly involved in the falsification, media said this week.

In June, Hatoyama acknowledged an aide had filed false reports, but said the funds were his own. He has also apologised for being careless in failing to declare about $800,000 worth of income from share sales in 2008.

WHAT WILL HAPPEN TO THE GOVT IF THE FORMER AIDE IS CHARGED?

Analysts say public opinion and media coverage will be key, and will likely play to Hatoyama's advantage.

With much attention distracted by battles over spending in the government's new public budget-cutting panels, the media is unlikely to focus on details of a scandal that has been in the public domain for months, analysts say.

And as the rich grandson of the founder of Bridgestone Corp (5108.T), one of the world's largest tyre makers, Hatoyama is not seen as having acted for personal gain.

Though polls show many voters are dissatisfied with his explanations of the affair, Hatoyama's government boasts support rates of more than 60 percent, high compared with other recent administrations.

But an indictment might still damage his party's image ahead of the upper house election in mid-2010. Hatoyama's Democrats need to win an overall majority to enable them to drop an awkward coalition with two small parties whose cooperation is currently needed to pass legislation smoothly.

If the Democrats do badly in the election they would face the same "twisted parliament" that stymied legislation under the previous Liberal Democratic Party government and forced the resignations of a succession of prime ministers.

For now, analysts say the public reaction is unlikely to be strong enough to force Hatoyama to step down. [ID:nT175484]

WHO WOULD TAKE OVER IF HATOYAMA RESIGNED?

Hatoyama took over the party leadership in May from Ichiro Ozawa, who was forced to step down after an aide was charged with accepting illegal corporate donations. Ozawa is still seen by many as the driving force of the government.

Deputy Prime Minister Naoto Kan, who has previously served as party leader, is seen as most likely to take up the reins if Hatoyama is forced to resign. Like Hatoyama, he is close to Ozawa and the switch would be unlikely to mean major changes in policy. [ID:nT230580] ($1=88.34 Yen) (Editing by Alex Richardson) ((isabel.reynolds@thomsonreuters.com; +813-6441-1883; Reuters Messaging isabel.reynolds.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) tok/mw

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