Japan’s Abe Replaces Economy Minister After Funeral Gift Scandal

Jon Herskovitz and Emi Nobuhiro

(Bloomberg) -- Japanese Prime Minister Shinzo Abe named a new economy minister after the man he appointed a little more than a month ago stepped down over allegations that one of his aides made an illegal funeral donation.

Isshu Sugawara, 57, told reporters Friday that he had resigned, becoming the first member of Abe’s cabinet to leave after being appointed in September to the post responsible for the economy, trade and industry. Abe said he would install Hiroshi Kajiyama -- a veteran in his ruling Liberal Democratic Party and a former minister for regional economic revitalization -- in Sugawara’s place.

While the resignation is an embarrassment for Abe, who’s on track to become Japan’s longest-serving prime minister next month, he has weathered far worse storms before. The replacement isn’t likely to dent support for his rule over the world’s third-largest economy.

“I am responsible for the appointment and I deeply apologize for it,” Abe told reporters, adding he wanted no pause in his plans to keep the economy moving. The swap won’t affect Japanese trade relations with the U.S., which are being managed by Foreign Minister Toshimitsu Motegi.

Pressure mounted on Sugawara this week when the Shukan Bunshun magazine published an article alleging that Sugawara’s secretary gave 20,000 yen ($185) in condolence money to a supporter’s family and made other inappropriate offerings to followers. Japanese law prohibits these types of donations, which can be seen as a form of vote buying and influence peddling.

It was a repeat scandal for Sugawara, who previously faced similar allegations of making illegal donations to constituents more than a decade ago in the form of pricey melons and crabs, the magazine report said. But the statute of limitations had expired before any action was taken.

Sugawara’s replacement, Kajiyama, 64, is the son of an LDP stalwart. He worked at the Japan Atomic Energy Agency before joining his father in politics. Abe first appointed him to the cabinet in 2017.

The Ministry of Economy, Trade and Industry has been at the forefront of export restrictions placed on items sent to South Korea as a part of an escalating feud between the neighbors. The ministry is also playing a role in the Regional Comprehensive Economic Partnership trade deal among Southeast Asian nations and other Asian partners.

Japan and others are pushing for a final deal by the end of the year, with the RCEP pact getting a fresh push at the meeting of ASEAN leaders that starts next week.

Hidden Gold, ‘Murky’ Payoffs Threaten Japan Nuclear Revival

The ministry is also responsible for oversight of the nuclear power industry, which is facing one of its worsts crises since the 2011 Fukushima disaster. A payoff scandal rocking the industry, which emerged at the end of last month, centers around how an influential municipal official in a town that hosts a nuclear plant spent years doling out large gifts to executives of its operator, Kansai Electric Power Co.

In his first news conference in the new post, Kajiyama said he wants to strictly address the problems at Kansai Electric and will do all he can to help the RCEP deal reach a conclusion by the end of the year.

(Adds news conference from minister in final paragraph.)

--With assistance from Gareth Allan and Yoshiaki Nohara.

To contact the reporters on this story: Jon Herskovitz in Tokyo at jherskovitz@bloomberg.net;Emi Nobuhiro in Tokyo at enobuhiro@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Muneeza Naqvi

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