Japan PM Abe loses one minister, another may follow

Yuko Obuchi.
KAZUHIRO NOGI | AFP | Getty Images
Yuko Obuchi.

Japan's Prime Minister Shinzo Abe looks set lose one, and possibly two, cabinet ministers on Monday in the biggest set back since he took office in 2012, with media reports the trade and industry minister had resigned and Abe was considering replacing his justice minister.

Trade and industry Minister Yuko Obuchi, 40, the daughter of a prime minister and tipped as a future contender to become Japan's first female premier, tendered her resignation over allegations her support groups misused political funds, reported NHK public TV.

Obuchi declined to comment after emerging from Abe's office on Monday morning.

Obuchi was one of five women appointed by Abe in a cabinet reshuffle less than two months ago -- a move intended to boost his popularity and show his commitment to promoting women as part of his "Abenomics" strategy to revive the economy.

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As head of the powerful Ministry of Economy, Trade and Industry (METI), Obuchi, a telegenic mother of two, was tasked with selling Abe's unpopular plan to restart offline nuclear reactors to a public worried about safety after the March 2011 Fukushima nuclear disaster.

Kyodo news agency said Abe was also considering replacing Justice Minister Midori Matsushima. The opposition Democratic Party on Friday filed a criminal complaint against Matsushima, accusing her of violating the election law by distributing paper fans to voters. The party has demanded that she resign.

Besides Obuchi and Matsushima, Defense Minister Akinori Eto has also questions from the opposition over his political funds.

Abe's public support has fallen and the scandals come as he prepares for tough policy decisions including whether to raise an already unpopular sales tax.

Read MoreRisks to 'Abenomics' growing, whether Japan PM raises tax or not

Obuchi's departures is the first cabinet resignation for Abe, who took office in December 2012 for a rare second term, promising to revive Japan's stalled economy and strengthen its security stance to cope with challenges such as a rising China.

Abe's first stint as prime minister in 2006-2007 was marred by scandals among his ministers - several quit and one committed suicide. Abe himself resigned after just one year in the face of parliamentary deadlock, sliding support rates and ill health.

His current government had been little touched by scandal until the cabinet rejig.

Opposition take aim

Abe must decide by year-end whether to proceed with a planned but unpopular hike in the sales tax to 10 percent, after a rise in April to 8 percent pushed the world's third-largest economy into its deepest quarterly slump since the 2009 global financial crisis.

Read MoreJapan economy still struggling with tax hike, data show

Abe's support has begun to sag, falling 6.8 percentage points to 48.1 percent in a weekend survey by Kyodo news agency from last month. Nearly two-thirds opposed a second tax hike and almost 85 percent said they didn't feel the economy had recovered.

Media reports of Obuchi's funding irregularities emerged on Thursday. On Saturday, NHK said two Obuchi political groups spent 43 million yen (400,000 U.S. dollars) on annual theater events between 2009 and 2011 and kept no record of spending on the 2012 event.

Another political funds group bought 3.8 million yen worth of goods from businesses run by her sister and brother-in-law over the four years through 2012, NHK said.

Obuchi told parliament she believed her supporters had paid for the theater events themselves but was aware it would be a legal violation if her political groups made more payments.

Read MoreJapan's Obuchi: Political 'princess' could be first female PM

"I feel that ignorance is no excuse," she said on Friday.

Abe had hoped the soft-spoken Obuchi would be able to ease opposition to atomic power, but political analysts say the controversy could hamper Abe's plan to reboot reactors, opposed by more than 60 percent of voters in the Kyodo survey.

Abe's ruling coalition has a hefty parliamentary majority, the opposition is fragmented and no general election need be held until 2016, but the opposition Democratic Party has taken aim at new ministers in debates to try to dent Abe's popularity.