Japan PM Hatoyama seen surviving funding scandal fuss

By Linda Sieg

TOKYO (Reuters) - New Japanese Prime Minister Yukio Hatoyama is facing harsh opposition grilling in parliament over a political funding scandal, but looks likely to survive the fuss as it stands.

Fresh off an August election victory that gave his party nearly two-thirds of the seats in parliament's lower house, Hatoyama might seem almost immune to an opposition hammering.

But with an election for the less powerful upper chamber looming next year, damage to his support rates would be worrying as he struggles with policy challenges, including how to fund ambitious programmes without inflating Japan's huge debt and managing strained ties with Tokyo's security ally Washington.

A poor showing in the upper house poll in mid-2010 could revive a parliamentary deadlock and stall policy implementation, and a failure by the Democrats to win an outright majority would leave them beholden to two small but vocal coalition partners.

Hatoyama has been plagued by the scandal since before his Democratic Party trounced the long-dominant Liberal Democratic Party (LDP), ushering in a government pledged to pay more heed to the interests of consumers than companies, but persistent questioning in parliament has revived attention on the topic.

In June, Hatoyama acknowledged an aide had filed false reports that included some people as donors who were deceased but said the funds were his own. He has also apologised for being careless in failing to declare about $800,000 worth of income from share sales in 2008.

However, political analysts said Hatoyama, one of Japan's richest lawmakers, was unlikely to suffer the fate of Ichiro Ozawa, his predecessor as Democratic Party leader, who resigned in May after an aide was charged with accepting illegal corporate donations.

"It depends on how much more comes out, but in some ways people knew about this before Hatoyama and the DPJ (Democratic Party of Japan) won the election, so the 'new' revelations are not that new," said Sophia University's Koichi Nakano.