Japan trade minister Yuko Obuchi apologises after political funds misuse reports

TOKYO (REUTERS) - Less than two months into her job, Japan's trade and industry minister, Yuko Obuchi, apologised to a parliamentary panel on Thursday for a controversy caused by reports that her political support groups had misused funds, violating an election law.

Obuchi, the 40-year-old daughter of a former prime minister, was picked by Prime Minister Shinzo Abe to head the powerful ministry of economy, trade and industry (METI) in a cabinet reshuffle in early September.

Regarded as a possible future contender to become Japan's first woman premier, Obuchi became mired in controversy as reports of misuse of funds hit news-stands on Thursday.

The weekly magazine Shukan Shincho reported that two political support groups in Obuchi's constituency had spent some 26 million yen (S$311,672) on theatre tickets for her backers in 2010 and 2011. Major newspapers also followed up on the allegations made by the magazine.

The Mainichi newspaper also said Obuchi's political funding oversight body had spent about 3.6 million yen over five years from 2008 at a clothing shop run by her sister, raising more questions.

"I apologise from the bottom of my heart for the fuss created by my private matter," Obuchi said in response to questions at a panel in the upper house of parliament.

She said that she had instructed the political groups to investigate the matter, adding she believed the payments to her sister's shop fell within the scope of political activities but that further checks would be made.

Chief Cabinet Secretary Yoshihide Suga told a news conference on Thursday that he expected Obuchi would provide an explanation.

Since her appointment, Obuchi has been given the tough task of trying to gain public trust for the government's unpopular policy of restarting nuclear reactors following the 2011 Fukushima atomic disaster.

Political analysts said the reports of funds misuse could delay the nuclear restarts if Obuchi's image was damaged or she had to resign, as well as deal a blow to Abe's administration.

"Given the power balance between the ruling and opposition parties, I don't think she will have to resign. But for sure, this is damaging to Abe's image," said independent political analyst Atsuo Ito. Abe's ruling coalition has a hefty majority in parliament and the opposition is fractured and in disarray.

"The Abe cabinet will try hard to protect her, because her resignation would cause even bigger damage."

Abe's first brief tenure as prime minister in 2006-2007 was marked by scandals among his cabinet members, several of whom were forced to resign, but since his return to office in December 2012, his cabinet has been relatively scandal-free.

The opposition Democratic Party, however, has been targeting new cabinet ministers in parliamentary debate in hopes of denting Abe's popularity, still relatively robust at around 50 percent.