Japan... Economic Minister to Resign

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UPDATE 1-Japan economics minister to resign on Monday-media Reuters, 01.21.01, 9:37 PM ET

TOKYO, Jan 22 (Reuters) - Japanese Economics Minister Fukushiro Nukaga could resign as early as Monday amid allegations he took money from a scandal-hit insurer, dealing yet another blow to embattled Prime Minister Yoshiro Mori, domestic media said.

Nukaga would be the third minister to quit the Mori cabinet since the premier took office nearly 10 months ago and comes as his approval ratings languish near record lows.

Nukaga was set to tender his resignation after meeting top officials of his faction, the biggest in the multi-group ruling Liberal Democratic Party (LDP), economic daily Nihon Keizai Shimbun said.

Intercepted by reporters as he entered a meeting on Monday, Nukaga was unclear on whether he would bow to pressure to resign.

"I take it seriously... I belive it is good to carry out my duties calmly," he told reporters. As minister in charge of economic and fiscal policy, Nukaga is a key figure in the government. He is seen as a rising star in the LDP and has played a leading role in a group considering measures to prop up Japan's ailing stock market.

His departure might not only put the brakes on already slow progress in economic restructuring but would have deep political ramifications for the LDP as it heads into an Upper House election in July under the leadership of one of the most unpopular prime ministers in years.

Nukaga reportedly received a contribution of 15 million yen ($128,200) from insurer KSD. He has said one of his secretaries received the money but he was not notified until much later, and that he then returned the cash, Japanese media reported.

Opposition politicians said they wanted to call Nukaga and other politicians to testify before parliament about their ties to KSD, an industrial insurer at the centre of a bribery scandal that has led to the arrest of one LDP Upper House lawmaker and the resignation of the LDP's leader in the upper chamber.


Nukaga has been touted as a possible successor to Mori. But his entanglement in the swirling scandal will likely derail, at least for the time being, his path to Japan's top job.

His departure and the absence of any other clear successor to Mori cast greater uncertainty over policy in the world's second-largest economy as it struggles to emerge from a decade of virtual stagnation.

Those problems have fuelled heated debate on measures to try to halt a slide in the stock market, which has lost more than 30 percent in the last nine months. In addition, the yen hit an 18-month low against the dollar last week of 119.90 yen. The yen recovered to 116.25 early on Monday but by mid-morning was at 116.63 yen.

Nukaga is a member of a new economic policy panel set up by Mori at the start of the year and entrusted with tackling mushrooming public debt and removing some budgetary drafting powers from bureaucrats.

Mori's tendency to make verbal blunders, the scandals that have cost two cabinet ministers their portfolios in the last few months and a moribund economy have helped to turn the administration into the most unpopular in years.

In a poll released on Monday by the Asahi Shimbun newspaper, 19 percent of respondents said they supported Mori's government while the disapproval rate was at 63 percent.

It also showed 64 percent of the respondents said the pro-business LDP would not be able to win July's Upper House election under Mori's leadership.

Nukaga served as deputy chief cabinet secretary from October 1999 to July last year. He was appointed to his current post in a cabinet reshuffle in early December.

He was originally scheduled to accompany Mori to the Davos economic forum in Switzerland later this week, but cancelled his trip last Friday amid the mounting scandal.

In November 1998, Nukaga resigned as defence minister over a procurement scandal in which two defence agency officials were indicted, along with officials of several contractors. Copyright 2000, Reuters News Service.

-- kevin (ktross@mailcity.com), January 22, 2001

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