TOKYO - JAPANESE Finance Minister Kaoru Yosano on Wednesday denied any wrongdoing after a newspaper said his political support group had accepted what appeared to be illegal donations from a dummy organisation.

VIDEO Japan's finance minister denies scandal (1:30)

Mr Yosano, who holds the three main finance and economics posts in the cabinet, is widely seen as the driving force behind Japan's economic policy as it struggles to escape its worst slump since World War Two.

The issue could also weigh on Prime Minister Taro Aso's already unpopular Liberal Democratic Party (LDP) ahead of an election he must hold by October at the latest.

The Mainichi Shimbun said Mr Yosano's political support group accepted more than 55 million yen (S$843,400) in donations between 1992 and 2005 from a dummy organisation that was funded by a futures trading company and related firms.

Such indirect donations are not permitted under the political funding law, it said. Some of the funding occurred in the late 1990s when when Mr Yosano held the trade and industry portfolio, a position that put him in charge of futures trade, it added.

Mr Yosano denied there had been any illegal activity. There was no immediate market impact to the newspaper report.

Polls show the long-ruling Liberal Democratic Party (LDP) is in serious danger of losing to the opposition Democratic Party.

Mr Yosano might face pressure to resign if the reported affair occurred while he was a cabinet minister, dealing a blow to Aso's re-election chances, sadi Yasunori Sone, a political science professor at Keio University in Tokyo.

Ichiro Ozawa resigned as leader in May after a close aide was charged with accepting illegal corporate donations, and the affair was back in the news last week as the trial of a former construction company executive involved got under way. -- REUTERS