Koizumi drawn into tax evasion scandal

Junichiro Koizumi, the Japanese Prime Minister, suffered another blow at the weekend with a corruption scandal that threatens to bring down one of his closest political rivals.

The political career of Koichi Kato, a close friend of Mr Koizumi and one of the leading reformers of his Liberal Democratic Party (LDP), hangs in the balance this week after his chief aide was arrested on Friday for tax evasion.

If true, the allegations paint a damning picture of one of the country's most outspoken politicians. They suggest that Mr Kato's public campaign against corruption within the LDP was supported by illegally raised funds.

After a remarkable eightmonth honeymoon as Japan's most popular Prime Minister yet, Mr Koizumi has staggered from one misfortune to another this year. In January, he sacked his popular female Foreign Minister, Makiko Tanaka, after she became embroiled in a damaging feud with Muneo Suzuki, a senior LDP politician.

Last week, an official investigation found that Mr Suzuki had, just as Ms Tanaka alleged, been interfering in Foreign Ministry business. Mr Koizumi's approval rating, which was once close to 90 per cent, has sunk to below 50 per cent.

Mr Kato's former treasurer, Saburo Sato, was arrested on Friday and accused of evading 100 million yen (£550,000) in income tax. The tax was owed on sums paid to Mr Sato by construction companies, as "consultancy fees" for helping them to win government contracts.

Mr Koizumi's appeal lies in his independence of party factions, but his isolation also leaves him vulnerable to enemies within the party. Mr Kato has been one of his protectors; if he is forced to resign, the Prime Minister will be dangerously undermined.