TOKYO, Nov 9 (Reuters) Prosecutors have arrested a former Japanese defence company executive at the centre of a scandal involving a former senior defence ministry official on suspicion of embezzling about 1 million dollars from the firm's US unit, Japanese media said.
The widening scandal is likely to further complicate Prime Minister Yasuo Fukuda's efforts to restart Japan's naval mission in support of US-led operations in Afghanistan -- stalled by opposition parties, which control parliament's upper house and can delay new enabling legislation.
Prosecutors suspect that Motonobu Miyazaki, 69, a former top executive of Tokyo-based Yamada Corp, embezzled the money from Yamada's US unit to obtain funds to set up a new firm, media reported today.
Prosecutors declined to comment on the reports.
So did Finance Minister Fukushiro Nukaga, who has held the defence portfolio in the past, most recently in 2006.
''I'll refrain from commenting on it as it's in the hands of judicial authorities. I hope they will find out the facts,'' Nukaga told reporters.
Last week, former Vice Defence Minister Takemasa Moriya admitted under oath in parliament that he had played golf more than 200 times with Miyazaki over more than a decade and was treated to meals, trips and gifts.
But Moriya, 63, denied he had done favours for Miyazaki, who Japanese media said was not only politically well connected at home but had close ties with US defence officials as well.
Moriya also told parliament that an ex-defence minister had been present once when he was wined and dined by the company executive, but he declined to identify the politician.
Miyazaki left Yamada Corp in June 2006 and established his own firm, Nihon Mirise Corp., three months later.
The two companies had competed over contracts from the Defence Ministry for jet engines made by General Electric Co for the Japanese air force's next-generation transport aircraft.
Yamada had served as the sales agent in Japan for General Electric, but the US firm switched its agent contract to Nihon Mirise in late July, according to media reports. Company officials were not immediately available for comment.
TV footage showed more than a dozen prosecutors entering Nihon Mirise's office in Tokyo today to conduct a probe.
General Electric told Yamada and Nihon Mirise earlier this month that it would temporarily suspend all business dealings with them, Kyodo news agency reported.
Miyazaki's arrest follows an agreement by the ruling and opposition parties to summon him and Moriya to parliament to testify as sworn witness next week.
REUTERS AM ND1112