Latest whiff of scandal for Japan trade minister - he received funds from foreign-owned firm

TOKYO (Reuters) - Japan's new trade and industry minister, already under fire over fund-related improprieties, received contributions from a company in which foreign investors held a majority stake, but was not aware of the possible violation of the political funds law at the time and has returned the money, an aide said on Monday.

It was the latest whiff of scandal for Prime Minister Shinzo Abe's Cabinet. Last week, two ministers including Mr Yoichi Miyazawa's predecessor as head of the Ministry of Economy, Trade and Industry quit over possible political funds misuse.

The justice minister also resigned over a separate minor possible legal infraction although she denied any wrongdoing. "He (Miyazawa) did not have any idea at the time" that foreign investors had a majority stake in the company, the aide said, adding that the money, a total of 400,000 yen (S$4,700) received in 2007 to 2008, had been returned.

Mr Miyazawa's fund reports have been scrutinised since he acknowledged last week that an aide spent 18,230 yen at an S&M-themed bar, and that he himself held 600 shares in Tokyo Electric Power Co, the operator of the tsunami-hit Fukushima nuclear plant that his ministry oversees.

Ministers typically divest themselves of shares in companies they oversee before taking their posts but are not allowed to buy or sell them after assuming their positions. Miyazawa has said he would put the shares in a trust and that owning them would not affect his policies toward the utility.

The reports have dented Mr Abe's support rates, although they are still at around 50 per cent, and is complicating a decision he must make by year-end on whether to proceed with a planned but unpopular rise in the sales tax to 10 per cent from October 2015 despite worries about the impact on economic growth.

Mr Abe's first term between 2006 and 2007 was marred by a string of resignations, a pension records scandal, and a minister's suicide that eroded his support.

Eventually, he quit in the face of parliamentary deadlock and ill-health, although experts are not presently predicting a rerun of that scenario.