Japanese Kingmaker Falls Victim to Scandal : Politics: Power broker quits as vice president of ruling party after admitting he took $4-million payment.

Shin Kanemaru, perhaps the most powerful man in Japanese politics, resigned Thursday from his post as vice president of the ruling Liberal Democratic Party after admitting that he received $4 million in 1990 from a scandal-ridden trucking company.

“I wanted to refuse it (the money), but since the amount was so large, I accepted it as an offering to my party colleagues,” said a bowed and tired-looking Kanemaru, who added that he also plans to step down from his powerful position as head of the party’s largest faction.

Kanemaru’s surprise announcement, made at party headquarters during a hastily called press conference Thursday afternoon, took the lid off a scandal that has been simmering since early this year.

The case of Sagawa Kyubin, a Kyoto-based trucking company that contributed large sums to bureaucrats and politicians to help it crack the heavily regulated trucking business, is shaping up as one of the nation’s largest corruption cases since World War II, political pundits say.

Some even suggest that it could be more damaging to the ruling party than the 1989 Recruit scandal, which forced the retirement of then-Prime Minister Noboru Takeshita and then-Finance Minister Kiichi Miyazawa--who is now prime minister--and resulted in the ruling party’s loss of a majority in the upper house of Parliament.

Although Kanemaru was once deputy prime minister, he never held the highest post. But with 30 years’ political experience and the strength of the ruling party’s largest faction behind him, Kanemaru was able to play kingmaker in selecting the last three prime ministers--Sosuke Uno, Toshiki Kaifu and Miyazawa. Kanemaru and the prime minister are not total political allies; Miyazawa leads a smaller, rival party faction.

It is still far from clear how Kanemaru’s involvement in the scandal will change the balance of power within the ruling party and whether Kanemaru’s power will be diminished.

The stock market reacted calmly to the news of Kanemaru’s resignation as market participants do not expect the scandal to delay implementation of a $55-billion emergency plan designed to bail out the Japanese economy.

Kanemaru has been a strong supporter of the package since he returned from a July visit to Washington in which he promised President Bush that Japan would undertake a massive increase in spending on public works projects.

Stocks rose sharply earlier in the week in anticipation of the plan’s rapid implementation, and any uncertainties over the government’s ability to act quickly could revive worries of financial crisis and send stocks plummeting.

Prosecutors are already aware of 10 politicians who received $12 million from Sagawa Kyubin, and insiders predict the payoffs will ultimately prove to have been in the hundreds of millions of dollars.

Among those believed to have received payoffs is Koichi Kato, the secretary general of the Liberal Democrats and Miyazawa’s right-hand man. According to some reports, as many as three former prime ministers were also on the take from Sagawa.

Political observers, caught off-guard by Kanemaru’s announcement, were left speculating about what the wily, 77-year-old power broker was up to in confessing to wrongdoing before any formal charges had been filed.

“There is still a lot left to come out, and he (Kanemaru) is trying to stave off a more thorough investigation,” argued Hisashi Kikuchi, a political commentator who was one of the first to write in depth about the Sagawa scandal.

Because Kanemaru has operated behind the scenes, his twin resignations do not in themselves significantly reduce his power.

But any indication that he granted favors in return for the money could hurt his standing and bolster that of Miyazawa.

Although Kanemaru has been a great help to Miyazawa in getting bills passed through Parliament, his overwhelming political power also put the prime minister in a kind of straitjacket.

Kanemaru and his protege, senior party official Ichiro Ozawa, consider themselves staunch allies of the United States. The prime minister is considered less likely to follow the U.S. lead.

A weaker Kanemaru and Ozawa could allow Miyazawa more freedom to act, enabling him to launch his own policy initiatives rather than acquiesce to U.S. demands.

“General feelings in the public and bureaucracy are going in that direction, and the politicians could follow,” said Takashi Inoguchi, professor of political science at Tokyo University. Inoguchi points to the Ministry of International Trade and Industry’s publication of a report criticizing U.S. trade policies as unfair, and he cites this as an example of the kind of initiatives more Japanese would like the government to take.