Luck ran out for Japanese Mr Clean

WHY DID Japan's prime minister, Morihiro Hosokawa, resign last Friday? The answer appears to be a dark secret involving a shady publisher, gangsters and a black market loan scheme that has been buried for more than a decade. The prospect of its becoming public was enough to make the 56-year-old leader give up the job that he had coveted for so long after just eight months in office.

Mr Hosokawa's resignation plunged the coalition government into chaos, left negotiations over next year's budget stalled in par liament, and revealed deep splits between the coalition partners. His most likely successor is the Foreign Minister, Tsutomu Hata, but the small Sakigake party, with 15 of the coalition's 260 seats in the lower house, was yesterday continuing to obstruct the transition.

At his press conference last Friday afternoon Mr Hosokawa said he was stepping down to end the confusion over two questionable financial deals in which he was involved - neither of which, however, were technically illegal. He had received a pounds 625,000 loan from a controversial businessman in 1982, which he claimed to have repaid, and his office had bought shares on the stock market in 1986 under his father-in-law's name, earning a substantial profit. Shady, perhaps, but not against the letter of the law. 'I sincerely hope that (my resignation) will restore the trust on the part of the public for the process of politics,' Mr Hosokawa said.

But now it is emerging that the real reason for Mr Hosokawa's sudden departure was to prevent even more embarrassing revelations from coming to light. They concerned his apparent involvement in a loan-shark scheme linked with organised crime. Opposition politicians in the Liberal Democratic Party (LDP) had found evidence that they thought implicated Mr Hosokawa in the common practice of mobsters lending money at high levels of interest to people who cannot get loans elsewhere.

These sarakin syndicates operate outside the law, and are equally feared and respected in Japan because they often resort to violence to guarantee debt collections. The LDP knew that if it could establish the link between Mr Hosokawa and the sarakin, it could end his prime ministership.

That link came in the person of Yusei Kuwahata, a 60-year-old publisher and 'consultant' who had been managing funds for LDP politicians for years. He met Mr Hoso kawa in 1980, and when the future prime minister said he needed to raise large funds for his political career, Mr Kuwahata said he could guarantee a 12 per cent annual yield on money given to him.

Mr Hosokawa became friendly with him, and they played golf and went drinking together. Eventually Mr Hosokawa gave him at least pounds 375,000 to invest - money that allegedly went straight into a loansharking scheme. Mr Kuwahata claims the money was invested in stocks and convertible bonds.

When the LDP threatened to reveal this, Mr Hosokawa knew his luck had run out and decided to resign. Mr Kuwahata, for his part, has hit out angrily at Mr Hosokawa's aides for spreading what he says are lies about him and his business: 'I am not a criminal, nor am I a black marketeer. I hope the office of Mr Hosokawa will apologise to me.' But, for the time being, the man who came into office as a 'Mr Clean' pledging to reform Japan's corrupt money politics has nothing more to say on the matter.