Hata to Name Cabinet, Put Emphasis on 1994 Budget : Japan: After meeting of party chiefs, the outgoing Hosokawa admits failing to report $276,000 in income.

Party leaders of Japan’s ruling coalition on Friday officially chose Foreign Minister Tsutomu Hata to be their candidate for prime minister to replace Morihiro Hosokawa, who admitted that he failed to report $276,000 in income to tax authorities.

Hata, 58, who is expected to win an election Monday for the nation’s top political post, said he wanted to mold Japan into “a country in which everyone can live at ease and make a living, a country which, in international society, is trusted, understood and loved.”

Chosen after 14 days of bitter struggling to hammer out a platform for the new government, Hata said he will name his Cabinet on Monday and place priority on enacting the fiscal 1994 budget, deliberations on which already are three months behind schedule.

The Nikkei News Service, quoting an anonymous Foreign Ministry official, reported that Hata will visit Italy, France and Germany May 3-7, a period that includes three Japanese holidays, to consult with their leaders before the July summit of seven advanced industrial democracies in Naples, Italy. Hosokawa had been scheduled to make the trip before he announced his resignation.

Hosokawa, who was bedeviled by squabbling within the coalition, offered Hata both congratulations and thanks in advance for taking on what he called “ordeals” that lie ahead.

After the meeting of party chiefs, Hosokawa spoke about his failure to report the $276,000 in income. He called it an unintentional oversight. His chief secretary, Namio Yatsuka, said in a news conference that the income was received over a 10-year period beginning in 1981.

When Hosokawa surprised the nation April 8 by declaring he would resign, he cited as his main reason what he called a new discovery of financial dealings tainted by “suspicions of illegality.” But until Friday, he had provided no details.

Hosokawa said he had been unaware of how his staff had handled profits from investments in stocks made on his behalf by a friend who was an investment consultant. His staff, he said, mistakenly believed that profits on investments from personal funds were not subject to tax if spent as political funds.

Yatsuka said he had informed Hosokawa of the office’s mistake the night before the prime minister announced that he would resign to accept “moral responsibility” for the affair. The secretary added that Hosokawa’s office will now report the income and pay penalty taxes.

The statute of limitations on prosecution of tax evasion has already expired.

Opposition Liberal Democrat lawmakers said they will continue to pursue information about two other Hosokawa deals--a $952,000 loan that Hosokawa admitted receiving in 1982 and the purchase in 1986 of $4 million worth of shares in Nippon Telegraph & Telephone Corp. in the name of his father-in-law.

In his resignation speech, Hosokawa admitted that he had incorrectly stated that he had paid interest on the loan. But he insisted that he was innocent of any wrongdoing involving the loan or the stock purchase. The unpaid interest, estimated at $285,714, had been reported “properly” as a political contribution, he said.

Hosokawa said Friday that he will retain his seat in the lower house of Parliament and continue serving as head of the Japan New Party that he founded two years ago.