Opposition leader weakened by top aide indictement

AFP - A top aide to Japan's opposition leader was indicted Tuesday for violating party funding rules in a political scandal that has put his boss's job on the line.

Ichiro Ozawa -- the leader of the Democratic Party of Japan (DPJ), who has been widely tipped as a likely future premier after elections later this year -- was due later Tuesday to announce whether he would stay on or quit.

The Tokyo Public Prosecutors' Office indicted his aide Takanori Okubo, 47, for breaking the law on political funds, although observers saw the fact that he avoided more serious bribery charges a sign that Ozawa may opt to stay as DPJ leader.

"Today will be an important day, but we want to unite as a party," the DPJ secretary general Yukio Hatoyama told senior opposition lawmakers earlier.

Ozawa was scheduled to meet senior party officials at 9:00 pm (1200 GMT) at its headquarters in central Tokyo, and to hold a press conference afterwards, party officials said.

Investigators allege Nishimatsu Construction gave donations through front groups to Ozawa's fund-raising team, run by Okubo, with the hope of securing lucrative public works contracts.

Okubo "made false reports of receiving donation money" by saying the money came from political support groups when it really came from the construction company, prosecutors said in a statement.

"We concluded that the case is serious and malicious as he covered up the fact that (he) received a lot of funds from a certain contractor for a long time," Jiji Press quoted deputy chief prosecutor Tsuneta Tanigawa as saying.

Reports said prosecutors have no immediate plans to question Ozawa.

The scandal has damaged both the DPJ and Prime Minister Taro Aso's ruling Liberal Democratic Party (LDP), some of whose lawmakers have also admitted to taking money from Nishimatsu.

It also threatens to further undermine political life in Japan, the world's second biggest economy, which has seen four premiers in under three years and is in the grip of a recession the government says may be its worst since World War II.

The coalition government, led by the unpopular Aso, must call elections by September. Voter polls have indicated that Ozawa's DPJ has a better than even chance of ending a half-century of near unbroken LDP rule.

Asked about the indictment, Aso told reporters: "I cannot comment on every single case, but I'm really afraid that such a problem would lead to distrust in politics."

Earlier this month, Ozawa apologised for being at the centre of the scandal but said he still wants to lead his party to victory in elections.

"My ultimate goal as a politician is a change of power," Ozawa said at the time. "We've got to win the general elections."