Kingmaker Ozawa Should Be Indicted for Funding Violations, Panel Says

Ichiro Ozawa, Japan’s most powerful politician, was recommended to face criminal charges over a finance scandal involving his aides, increasing pressure on Prime Minister Yukio Hatoyama to dismiss his former boss.

Ozawa, secretary general of the ruling Democratic Party of Japan, should be indicted, a newly empowered judicial panel said in a statement today. The recommendation to prosecutors, made by Japan’s equivalent of a grand jury, would become legally binding if the panel votes the same way a second time. Ozawa vowed to keep his post, saying he had done nothing wrong.

The case will likely further damage Hatoyama, whose popularity is already plummeting ahead of upper-house elections set for July. Voters are disenchanted over his own funding scandal and a dispute with the U.S. over relocating an American military base. Hatoyama has repeatedly rebuffed calls to fire Ozawa after three aides were indicted in February.

“There’s going to be criticism either way, but it will grow even louder if Ozawa doesn’t quit,” said Yasunori Sone, political science professor at Tokyo-based Keio University. “The impact on the election is inevitable.”

‘Doing My Duties’

Ozawa, 67, is a former DPJ leader and architect of the party’s landslide election victory last August. Prosecutors declined in February to pursue charges against him.

“As the prosecutors’ investigations have shown, I didn’t receive any suspicious money,” Ozawa said in remarks shown on NHK Television. “I will keep doing my duties calmly.”

Chief Cabinet Secretary Hirofumi Hirano, the government’s top spokesman, said he “wasn’t in a position to comment.” Hatoyama declined to comment to reporters outside his office.

Ozawa was forced to resign as DPJ leader in May 2009 after a top campaign official was charged with falsifying fund reports. He engineered the party’s 2007 victory in the upper house of parliament, and retains the loyalty of many DPJ lawmakers for spearheading last August’s landslide in the more- powerful lower house. As party secretary-general he is in charge of determining which candidates will run in the next election.

Can’t Be Replaced

“Nobody can replace Ozawa,” said Jiro Yamaguchi, a political science professor at Hokkaido University in Sapporo. “I don’t think he’ll resign and DPJ lawmakers have given up calling for him to quit because he’ll take Hatoyama down too.”

DPJ lawmaker Tomohiro Ishikawa, Ozawa aide Takanori Okubo, and former assistant Mitsutomo Ikeda, were indicted in February for under-reporting 545 million yen ($5.8 million) in income for 2004, part of which was used to buy land in Tokyo for Ozawa’s fund-raising group. Ozawa wasn’t charged. Prosecutors have three months to examine today’s ruling before making a decision.

“The panel concluded it was common sense to charge” Ozawa, former Tokyo prosecutor Norio Munakata said. “I think the panel will force an indictment, because prosecutors are likely not to proceed on their own since they are unlikely to gather new evidence.”

Ozawa’s troubles began last March when Okubo, his chief accountant, was arrested and then charged with falsely reporting 35 million yen in donations from Nishimatsu Construction Co. Okubo denies the charge. Ozawa resisted calls for him to step down as DPJ leader for two months before doing so in May.

Hatoyama’s approval rating fell 12 percentage points to 24 percent from March, the Nikkei newspaper said yesterday, while his disapproval rating rose 11 points to 68 percent. The paper polled 914 people from April 23-25 and didn’t provide a margin of error.

To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net;

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