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* Citizens' group to request judicial review-paper
* Panel can force prosecution after three months
* Upper house election key to party's legislative agenda
By Isabel Reynolds
TOKYO, Feb 5 (Reuters) - Critics of Ichiro Ozawa, a key figure in Japan's ruling Democratic Party, say they will press on with efforts to have him charged in a funding scandal, casting new doubts on the party's chances in an election later this year.
Tokyo prosecutors decided not to charge party Secretary-General Ozawa because of lack of evidence, but a judicial panel can review the decision if asked to do so. The panel has the power to force a prosecution.
"Citizens' Group for Seeking the Truth," the group that made the initial complaint about misreporting of Ozawa's political funds, said in a report on the Asahi newspaper's Internet site on Friday that it was planning to request a review.
Ozawa, seen by many as the power behind the government, said on Thursday he would stay in his post, where his skills as a campaign strategist will be crucial to the party's chances in the critical mid-year upper house election.
But he could prove more of a liability than an asset to Prime Minister Yukio Hatoyama if voter suspicions further erode support rates, which have slid from about 70 percent to 50 percent or less since the government took power in September. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~Graphic on Japan voter support: r.reuters.com/myv63g ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~ If opposition parties win a majority in the election, expected in July, they could delay bills in the upper house, causing policy gridlock as Japan struggles to keep an economic recovery on track while reining in its huge public debt.
A newspaper poll published this week showed more than three quarters of respondents thought Ozawa should step down if a former aide turned lawmaker was indicted in the funding case. Almost all prosecutions in Japan lead to a guilty verdict.
"Ozawa will not get away scot free," said political commentator Minoru Morita. "He has said that lawmakers are responsible for their secretaries' actions, so voters will not allow him to claim that doesn't apply to him."
Anyone who sees a failure to prosecute as inappropriate can make a complaint to the judicial review board, which consists of lay people chosen at random from the electoral roll, initiating a re-examination of the evidence.
Under a 2009 change in the law hailed by some experts as revolutionary, if prosecutors fail to charge a suspect after being ordered to do so by the review panel, courts can appoint lawyers to carry out the prosecution in their place.
Three lawyers became the first to be appointed this week in such a process. They are set to prosecute police over the deaths of 11 people crushed in a crowd as they tried to leave a fireworks display via a footbridge in 2001. (Editing by Ron Popeski)