Japan minister denies link to scandal-tainted exec

TOKYO, Nov 16 (Reuters) Japan's finance minister today denied having been wined and dined by a defence contractor at the heart of a scandal that is complicating efforts to resume a naval mission in support of US-led operations in Afghanistan.

Former Vice Defence Minister Takemasa Moriya yesterday testified under oath in parliament that he had been at a dinner with Finance Minister Fukushiro Nukaga and defence contractor Motonobu Miyazaki, who was recently arrested on suspicion of embezzlement.

''I have no record or memory of being entertained by Mr. Moriya or Mr. Miyazaki,'' Nukaga told a news conference, after checking his appointment diary records.

The opposition has demanded that the two politicians testify in parliament and newspapers are speculating that Nukaga might have to resign from cabinet for the third time in his career.

Nukaga, who has held the defence portfolio twice in the past, said he might have met Miyazaki at parties or study group sessions, but had never dined with him or Moriya alone, nor had he attended a dinner at the invitation of Miyazaki.

Moriya -- who has admitted to being treated to hundreds of rounds of golf as well as other gifts from the defence contractor, also said another former defence minister, Fumio Kyuma, had dined with the executive on a separate occasion.

Any widening of the scandal over the contractor's wining and dining of government officials is likely to further complicate Prime Minister Yasuo Fukuda's efforts to restart a Japanese naval mission in support of US-led operations in Afghanistan -- stalled by opposition control of parliament's upper house.

It could also damage Fukuda's ability to implement policies in the face of a divided parliament, analysts said.

Prosecutors last week arrested Miyazaki, 69, a former top executive of Tokyo-based Yamada Corp, on suspicion that he had embezzled money from the firm's US unit to obtain funds to set up a new company, Japanese media have reported.

Media have also been awash with speculation about a slush fund set up by Miyazaki to court favours.

The rules on cabinet ministers accepting entertainment are vague.

''In dealing with related contractors, ministers must not behave in such a way as to arouse suspicion,'' a Cabinet Office official said, but she added that there was no penalty specified for breaking the rule.

Fukuda took office in September after his predecessor, Shinzo Abe, abruptly resigned after a year plagued by scandals and gaffes that cost him five ministers, including one who committed suicide.

REUTERS SG ND0912