Japan’s Socialists Drop Ruling Party Defector : Politics: The Liberal Democrats face a new scandal. But they get boost as the largest opposition party withdraws its support of Hata.

As yet another scandal struck Japan’s ruling Liberal Democrats, the surging opposition split apart Tuesday.

The Socialists, Japan’s largest opposition group, withdrew their previous support for former Finance Minister Tsutomu Hata. Hata, a defector from the ruling party, is a possible opposition candidate for prime minister if the Liberal Democrats lose the July 18 election for the lower house of Parliament.

The Socialist retreat from an agreement made only two days ago is expected to hand the beleaguered ruling party, whose holdings in the lower house have fallen 29 seats below a majority, a golden opportunity to claim once again that it is the only party capable of running the government.

“Voters will be bewildered as to what the Socialists are thinking,” Hata said.

But the Socialists have concluded that their embrace of ruling party policies and their support for Hata had cost them 60% of their seats in the Tokyo Assembly in an election Sunday. Party Chairman Sadao Yamahana, announcing the change at a news conference, insisted that his party will stick to its own policies from now on.

“I want to make clear that we are not saying that we will uphold Liberal Democrat policies in a coalition, nor are we even thinking of doing so,” he said.

He added that his party will decide whom to support for prime minister after the general election but suggested that he himself would be the party’s candidate.

Earlier, both he and the party’s secretary general had said the Socialists would support Hata, a former Cabinet minister, since his government experience would assure the public that a Cabinet without the Liberal Democrats could run the country.

Meanwhile, Toru Ishii, 67, the conservative mayor of Sendai, Japan’s 12th-largest city, and two of his associates were arrested on a charge of accepting a $952,000 bribe. Six executives of four construction companies were arrested on charges of making the alleged bribe last fall.

The arrest of Ishii, who had built a reputation as a “clean” mayor during 8 1/2 years in office, followed the case of Shin Kanemaru, the former kingpin of the Liberal Democrats. Kanemaru was arrested in March on tax evasion charges and faces possible fines of $18.3 million if convicted.

Examination of a mountain of documents seized in raids on 18 construction companies when Kanemaru was arrested uncovered evidence for the charges against Ishii, prosecutors said. Executives of the four construction companies were charged with paying the alleged bribe for Ishii’s help in past and future contracts. Prosecutors charged that the four companies decided that one of them, Mitsui Construction, would pay 10% of the alleged bribe and the other three--Hazama, Shimizu and Nishimatsu--would pay 30% each.

Immediately after the arrests in Sendai and Tokyo, the Construction Ministry suspended all four companies as “designated bidders” for public works contracts.

The new scandal came as U.S.-Japan talks to open the construction market here neared a deadline. Clinton Administration officials threatened in April that if a solution were not found by today, they would retaliate against Japan. Mass media in Tokyo, however, reported that the United States would extend the deadline.

Among the U.S. demands is that Japan allow open bidding for public works contracts, an opportunity now restricted to designated firms.