Japan: Abe's future in doubt as wife linked to cronyism scandal

Japan: Abe's future in doubt as wife linked to cronyism scandal

Japan: Abe's future in doubt as wife linked to cronyism scandal

The Japanese stock market is modestly lower on Tuesday, tracking the mixed lead overnight from Wall Street and as the yen strengthened after Japanese Prime Minister Shinzo Abe came under renewed scrutiny in a suspected cronyism scandal.

Versions of the original and the doctored documents published by Opposition lawmakers appeared to show Mr Abe's name had been scrubbed, along with that of his wife and Mr Aso from finance ministry records of the discounted sale of state-owned land to the school operator.

"The Cabinet won't resign en masse".

Abe said he wanted Aso to make every effort to clarify all the facts and ensure such acts were not repeated.

Japanese government bonds were steady to slightly weaker on Tuesday though trading was slow as investors anxious whether a scandal engulfing Japanese Prime Minister Shinzo Abe would grow further to threaten his position and policies. "Let's put an end to moves that submit politics to private interests".

A Finance Ministry official said that 14 items had been altered in the documents after February previous year - when the scandal broke - at the instruction of the ministry's financial division to match testimony in Parliament. Akie Abe left her role at the school after the scandal broke. Also removed was a reference to ties by Abe and Aso to a conservative lobby group, Nippon Kaigi.

Although market reaction to the Abe scandal has so far been limited, market players say more signs of trouble for the government will likely dent expectations that he will win his third term as the head of the ruling party and thus prime minister later this year and continue his aggressive stimulus.

Adding to the pressure, a finance ministry official linked to the scandal was found dead on Friday, although it is not clear if the reported suicide is linked to the affair. "What became clear is that they debased democracy", by lying to parliament, said opposition lawmaker Renho, who uses one name.

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The backing of Mr Aso, 77, who doubles as deputy premier, is vital to Mr Abe's bid for a third term and a key factor in the stability of his administration.

"At the very least, it seems that Aso's chances of surviving as finance minister are diminishing rapidly", wrote Tobias Harris, vice-president of consultancy Teneo Intelligence, in an email. He said there was no "smoking gun" showing direct intervention by Abe or his wife.

He said the alterations were conducted by bureaucrats at the finance ministry's division in charge of state land sales.

Last Friday, National Tax Agency chief Nobuhisa Sagawa abruptly quit over his remarks in Parliament about the case.

Some LDP members said the saga could undermine the party.

"It's a serious matter that the documents were altered".

Abe, 63, swept back to power in December 2012 promising to revive the economy and bolster Japan's defence.

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