MITI denies role in LNG plan linked to arrested oil trader

MITI denies role in LNG plan linked to arrested oil trader

TOKYO (AFP): A Japanese minister yesterday denied a report
that an oil broker arrested for tax evasion last week urged the
government to change plans for a liquefied natural gas (LNG)
project in favor of the Mitsubishi group.

International Trade and Industry Minister Shinji Sato asserted
that the municipal government in the northern city of Sendai had
the right to decide how to implement the Malaysian LNG project
and not the ministry in Tokyo.

"MITI (the ministry) could not have a role to play in the
final decision," he said.

But Sato said the ministry would conduct an internal probe
into alleged links between MITI officials and 60-year-old Osaka
oil broker Junichi Izui, reversing earlier remarks that the
ministry did not plan an investigation.

The Mainichi Shimbun reported earlier Friday that the Sendai
municipal government gave up its original plan to ship LNG to the
city after the ministry argued that building a pipeline would be
cheaper.

But the ministry "suddenly changed its mind" in late 1991 and
decided to go ahead with the original proposal to have the gas
shipped to city, the newspaper said, adding that prosecutors were
investigating Izui's possible role.

"Izui may have been involved in this project with the backing
of his personal connections with politicians and bureaucrats,"
the Mainichi said.

The newspaper also noted that Tohoku Oil Co. Ltd., a Sendai-
based unit of Mitsubishi Oil Co. Ltd., had since won a contract
to build LNG storage tanks in the northern Japanese city at a
cost of 39.3 billion yen (US$360 million). LNG shipments from
Malaysia are expected to start in June next year.

The Mainichi reported earlier that Izui paid two billion yen
in kickbacks to Mitsubishi Oil, although the company has denied
he played any role in its bid to explore for oil in Vietnam in
1992. Sato has also dismissed the possibility of the ministry
having a role in the contract.

Investigators have reportedly alleged that Izui donated
millions of yen to a former trade minister and that names of MITI
officials, as well as officials from other ministries, were found
in a notebook he used for dinner schedules.

Among members of the new cabinet formed last week, Finance
Minister Hiroshi Mitsuzuka's political faction and Health and
Welfare Minister Junichiro Koizumi have admitted receiving
donations from Izui. News reports say as many as 17 politicians
received 52 million yen (US$470,000) over three years.

Prime Minister Ryutaro Hashimoto said Tuesday that he was not
acquainted with Izui.

"As far as I know, there have been no donations. But just to
make sure, I've asked for further checks to be made," he said.