Banks May Rescue Tokyo Firm at Center of Scandal : * Politics: A new electoral funding embarrassment has prompted allegations that 130 parliament members received payoffs.

From Reuters

Creditor banks seemed ready Thursday to put up loans worth hundreds of millions of dollars to prop up the trucking firm at the heart of Japan's latest electoral funding scandal.

As moves went on behind the scenes to prevent Tokyo Sagawa Kyubin from sinking under its debts, Prime Minister Kiichi Miyazawa prepared for more hostile questioning in parliament about ruling party links to what could become the country's biggest political scandal since World War II.

Leading newspapers have carried allegations that about 130 members of parliament received payoffs from Tokyo Sagawa Kyubin, some taking millions of dollars apiece.

Industry sources said Thursday that Japanese creditor banks would lend up to $200 million to the struggling firm's parent, Sagawa Kyubin Group.

Of that sum, 14 creditor banks led by Sanwa and Sumitomo were expected to offer $40 million this month as relief operating funds for Sagawa, Japan's second-largest trucking group, the sources said.

Spokesmen from Sumitomo and Sanwa said the creditor banks had decided to extend financial aid to the troubled parcel delivery firm but declined to confirm other details.

Both said failure of the Sagawa group would seriously damage confidence in Japan's financial and social system.

The group applied in November to merge six of its companies as a rescue measure for Tokyo Sagawa Kyubin but still awaits Transport Ministry approval.

Last Friday, public prosecutors arrested two former Tokyo Sagawa Kyubin executives, including ex-President Hiroyasu Watanabe, on suspicion of financially damaging the company in connection with a huge loan-guarantee scheme.

The loans went to smaller companies, some possibly linked to a gangster syndicate. In return, press reports said, the firms gave the executives kickbacks which they used to buy favors from parliament members from both ruling and opposition parties.

As well as detaining Watanabe and his former managing director, prosecutors--acting after more than a year's covert investigation--also arrested two business associates.

On Wednesday, a Socialist opposition member sought to widen the case to include the founder-chairman of the group, Kiyoshi Sagawa, and Seisho Minatogawa, current president of Tokyo Sagawa Kyubin.

The demands came as parliament reconvened after a two-week opposition boycott called to press the ruling Liberal Democratic Party (LDP) to let senior members testify about their links to an earlier funding scandal.

Former Prime Minister Zenko Suzuki, who vigorously denies any wrongdoing, is to appear in the chamber next Tuesday.

As the opposition turned its attention to the Sagawa affair, a Socialist spokesman also demanded that the former political secretary of Hiroshi Mitsuzuka, leader of one of the LDP's five main factions, appear before the house.

He said Sagawa Kyubin was suspected of paying Mitsuzuka and his former aide a total of $64,000 in consultancy fees.

Tokyo press reports say Sagawa headquarters and its Tokyo affiliate may have paid the monthly salaries of at least 200 political secretaries working for LDP legislators.

If the allegations are correct, these payments, ranging from $1,600 to $2,400 monthly per secretary, would violate laws on political funding.

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