Ally’s Arrest in Bribery Case a Blow to Miyazawa : Japan: Prime minister is not directly implicated. But charges facing Fumio Abe could undermine leadership.

Japanese Prime Minister Kiichi Miyazawa, still recouping from the strained visit by President Bush and his entourage of American businessmen last week, now finds himself faced with a scandal that comes uncomfortably close to home.

Japanese prosecutors on Monday arrested Fumio Abe, 69, a former rising star of Miyazawa’s political faction, on suspicion of taking $615,000 in bribes from a developer.

Abe’s arrest was the first detention of a still-sitting member of Parliament since 1976, when Kakuei Tanaka, then a Parliament member and formerly the prime minister, was arrested on charges of accepting bribes from the Lockheed Corp.

Television cameras captured Abe being dragged from a small Tokyo hospital where he had apparently taken refuge.

Although Miyazawa is not directly implicated in the Abe case, many others in his faction are believed to have been involved, and the investigation could contribute to undermining a Miyazawa government already shaky from failing to win support for several key measures in Parliament last month.

Among the failed measures was a law that routinely would have allowed Japanese troops to be sent abroad as a peacekeeping force.

Abe was secretary general of Miyazawa’s faction in the ruling Liberal Democratic Party until December, when he resigned after early newspaper reports of the alleged bribes.

In a letter sent to the Miyazawa faction office, Abe said he is “sorry for causing a disturbance” but proclaimed his innocence. Miyazawa said on the evening television news that Abe’s arrest is “unfortunate” but that any misdeeds will be strictly dealt with.

Prosecutors contend that Abe accepted money from Kyowa Co., a steel frame-maker turned land developer, in exchange for information helpful to the company in winning contracts for the construction of a road and sports stadium on the northern island of Hokkaido. Abe, as director general for six months of the Okinawa and Hokkaido Development Agency in 1989, was in a position to offer such favors.

Kyowa declared bankruptcy last spring with $1.5 billion in debts, according to Teikoku Data Bank, the credit rating agency. Prosectors told the Japanese press that they have been investigating the company for possible involvement in fraudulent land deals since November, 1990.

Analysts reported that the Kyowa case is developing into the biggest scandal since the Recruit Co. influence-peddling scheme, which that led to the resignations of then-Prime Minister Noboru Takeshita and many in his Cabinet, including Miyazawa.

The Recruit scandal has continued to haunt Miyazawa. Opposition members of in Parliament are demanding that his former personal secretary be called before Parliament to testify on what critics say is new information regarding Miyazawa’s role in the Recruit scandal.

Although he has never been formally charged in the scandal, Miyazawa resigned as Takeshita’s finance minister in December, 1988, after offering explanations that were later contradicted about his secretary’s receipt of Recruit shares.

Japan’s public television station, NHK, reported in a long special on Monday night that Abe received a total of $3.7 million from Kyowa. Prosecutors estimate that about $615,000 of that sum went for bribes. It is unclear what the rest of the money was used for. According to NHK, Miyazawa faction records show the group received just $77,000 from Kyowa.

Even if Miyazawa survives the current scandal, observers believe that it will put increased pressure on him to carry out political reform.

Former Prime Minister Toshiki Kaifu was forced to resign last year in part because of his failure to pass a political reform bill, as he had pledged he would.