Tokyo prosecutors Thursday arrested an aide to House of Representatives lawmaker Taichiro Nishikawa and an aide to Tokyo Metropolitan Assembly member Tai Yamazaki for allegedly playing key roles in the illegal brokering of loan guarantees to small businesses.

Prosecutors arrested Nishikawa aide Kazuhiko Nunokawa, 39, and Yamazaki secretary Susumu Wada, 42, and searched a number of locations, including the offices of the two politicians, the same day.

Nishikawa, representing the Tokyo No. 14 electoral district, is a member of the New Conservative Party, which is a part of the ruling triumvirate. Yamazaki is a member of a group of independent lawmakers.

The case involves the abuse of a government program under which financial brokers charged sky-high fees for acting as go-betweens to help small businesses receive loan guarantees.

Prosecutors have already indicted 15 brokers for their involvement. They stand accused of violating laws limiting the amount of commission that can be charged by brokers. However, Thursday's arrest is the first time anyone suspected of working on behalf of the brokers has been apprehended.

According to sources, the two aides were approached by brokers and used their influence to have the Tokyo Metropolitan Government and the Tokyo Credit Guarantee Corp. of Tokyo -- an affiliate of the Ministry of International Trade and Industry -- agree to guarantee the loans the small firms took out from financial institutions.

The two aides are suspected of receiving several million yen as a reward for their services, the sources said.

Nunokawa was approached by 43-year-old broker Akira Murayama and assisted in securing loan guarantees on four occasions between May and November 1998, investigators alleged. They also claimed that Wada helped broker Yoshihiko Notomi, 72, on five occasions between November 1998 and May 1999. Commissions ranging from roughly 14 percent to 25 percent were charged.

The two brokers who allegedly worked with the aides received some 35 million yen in commissions from the cases on which they were indicted alone, with the money believed to have been paid to the two aides probably drawn from this sum, sources said.

Nishikawa said he spoke to Nunokawa on the phone Thursday morning, during which the suspect strongly denied that he had peddled influence for money.

"This (arrest) is very regrettable and I feel betrayed. I also feel it was insufficient supervision on my part," Nishikawa said.

The credit-guarantee scheme was one of the government's efforts to support small and medium-size businesses, many of which were experiencing difficulty in securing loans.

Financial institutions were cautious about lending to firms with relatively weak credit standing because they were concerned about reducing the amount of bad loans on their books.

While the credit-guarantee program sets certain conditions for the firms to be able to apply, observers have pointed out that lax screening leaves open the possibility of fraud.