Top politician acquitted

One of the most powerful men in Japanese politics was acquitted of all charges relating to a major fund raising scandal on Thursday, opening the door for him to challenge the ruling party leadership.

Ichiro Ozawa, whose mastery of backroom deals earned him the nickname "Shadow Shogun," was cleared by Tokyo's District Court of violating political fundraising laws as Japan's media elite looked on.

All major Japanese TV channels halted programming as the verdict came in, with a huge media presence outside the court to report on the case which has gripped Japan's political classes for years.

The 69-year-old former head of the ruling Democratic Party of Japan (DJP) stood accused of conspiring with aides to hide 400 million yen (3.7 million euro, $4.9 million) he lent to his political funding body in 2004 for a land deal.

According to his former aides, Ozawa had not been aware of the error, which was purely technical. Prosecutors contested, however, that it was "unthinkable" that Ozawa had not been in the loop.

Leadership battle?

As the head of the DPJ's biggest faction, Ozawa is often seen as the power behind the premiership. He has also been credited engineering the party's 2009 election victory.

While a conviction would almost certainly have stripped him of his political clout, Thursday's verdict clears the way for Ozawa to confront Prime Minister Yoshihiko Noda over a contentious tax hike scheme.

Both Ozawa and his faction, which makes up around a third of the DPJ, oppose Noda's plan to double sales tax by 2015 in a bid to tackle debts which are equivalent to twice Japan's GDP. His opposition to the hike could ultimately see him take on Noda for the party leadership.

However, Kenji Yamaoka, a DPJ lawmaker close to Ozawa, ruled out any immediate showdown.

"We are not seeking confrontation blindly. We are not thinking about a power struggle in the party," Yamaoka told Japan's private TBS network.

ccp/slk (AFP, Reuters)