TOKYO: Japanese Prime Minister Junichiro Koizumi denounced as groundless the latest opposition allegations of shady links between his ruling party and disgraced Internet entrepreneur Takafumi Horie, even as speculation simmered that the affair could widen into a broad political scandal.

Koizumi's government has already been backfooted by the indictment of former Livedoor Company CEO Horie on charges of violating securities regulations, since the ruling Liberal Democratic Party (LDP) had backed him a symbol of reform in a parliamentary election last September.

Talk that the Livedoor affair could widen is adding to Koizumi's woes as he enters his final months in office and could affect the race to succeed him when he steps down in September.

"It's pure speculation, but if the Horie scandal envelops key guys around Koizumi, then the 'crown prince' is in some trouble by association, even if he had nothing to do with it," said Columbia University professor Gerald Curtis, referring to Chief Cabinet Secretary Shinzo Abe.

Abe, 52, known for his hawkish stance on security matters, is widely seen as the leading contender to succeed Koizumi.

Democratic Party lawmaker Hisayasu Nagata said on Thursday that Horie before the election had ordered Livedoor officials via e-mail to pay 30 million yen (US$255,000) in consulting fees to the son of LDP Secretary General Tsutomu Takebe.

Takebe, who has apologized for campaigning on Horie's behalf, has denied the allegations and did so again on Friday.

Kyodo news agency, quoting Horie's lawyer, said the former CEO had also denied sending the e-mail or any money.

Abe told a news conference it was Nagata's responsibility to prove his allegations, and the LDP said it had filed a motion seeking disciplinary action by the lower house against him for making defamatory remarks based on groundless allegations.

"It is deplorable that Nagata has injured someone with groundless information," Koizumi told the parliamentary panel.

No national election is scheduled until an upper house poll in mid-2007, so the main opposition Democrats may not benefit much from the Livedoor affair.

Takebe is expected to be replaced in September, anyway, but should he be forced to step down early, Koizumi's already weakening clout would fade further since many in the LDP have long opposed his reform policies, analysts said.

Source: China Daily