The secretary general of the Liberal Democratic Party's financial stability subcommittee has stepped down from that and another panel amid allegations he profited from Nikko Securities Co. through dubious equity investments made on his behalf, LDP sources said Tuesday.
Shokei Arai, a former Finance Ministry bureaucrat, said at a news conference Monday that he opened a Nikko account under an assumed name. However, he denied having pressured Nikko officials into engaging in discretionary trading.
The revelation is one of many expected to unravel soon as prosecutors investigate a series of payoff scandals linked to "sokaiya" racketeer Ryuichi Koike, who has been linked to all of the nation's major brokerages -- Nomura Securities Co., Daiwa Securities Co., now-defunct Yamaichi Securities Co., and Nikko.
Nikko executives have already been indicted on charges of violating the Commercial Code, allegedly by compensating Koike for losses accumulated during transactions on the stock market.
As revelations of Arai's allegedly illegal profits unfolded, members of the LDP's leadership decided that he should be removed from the fiscal panels. He submitted his resignations shortly afterward.
On Tuesday, LDP Secretary General Koichi Kato met with Sohei Miyashita, a senior member of the LDP faction to which Arai belongs, to consider further action.
The Tokyo District Public Prosecutor's Office is also reportedly involved.
Arai was elected to the Lower House in 1986 on the LDP's ticket. In 1994, he left the LDP and joined Shinshinto, but returned to fold in July 1997.