Fukushiro Nukaga resigned Tuesday morning as minister for economic and fiscal policy over allegations that he received 15 million yen from the mutual aid organization KSD in return for favors.

Nukaga tendered his resignation to Prime Minister Yoshiro Mori amid mounting pressure to do so from heavyweights in the Liberal Democratic Party as well as the LDP's coalition partners, New Komeito and the New Conservative Party.

Mori appointed Taro Aso, 60, a former director general of the Economic Planning Agency, as Nukaga's successor. Aso, a senior member of the LDP faction led by Foreign Minister Yohei Kono, officially assumed the post in an attestation ceremony at the Imperial Palace in the morning.

Nukaga's resignation, which deals yet another blow to Mori's fragile administration, came a day later than was expected, suggesting his reluctance to give the impression that he succumbs to pressure easily.

Although Mori and his coalition government is expected to look for ways to patch up the damage done by Nukaga's departure and close ranks before the ordinary Diet session opens Jan. 31, the resignation of the third minister since Mori took office last year is likely to further encourage opposition parties to challenge the prime minister over his poor Cabinet choices.

Some Diet sources allege that top LDP officials had an inkling that Nukaga may have had ties to KSD, a Tokyo-based insurance foundation for small businesses but opted to let him join the Cabinet anyway.

The opposition camp is also expected to demand that Nukaga testify before the Diet, along with Masakuni Murakami, who stepped down as chairman of the LDP members' general assembly in the House of Councilors earlier this month due to his links with KSD and those of his former aide, Upper House member Takao Koyama. Koyama was arrested this month for allegedly receiving KSD bribes.

NCP President Chikage Ogi said she is willing to accept an opposition demand for Nukaga to be summoned for questioning in the Diet.

"A Diet member should not take actions that breed distrust," she told reporters Tuesday.

Koyama, who was ousted from the LDP after his arrest, should immediately resign from the Diet, she added.

"(Although the resignation is) regrettable, I respect your decision," Mori told Nukaga as he accepted his departure. "I hope you will continue to support the government."

Although Nukaga denied accepting bribes from KSD, he said he stepped down from his post in order to forestall further turbulence in the Cabinet and the upcoming Diet session. He has admitted that one of his secretaries accepted 15 million yen in cash from a former KSD president but claimed the money was returned in full when he found out about it six months later.

"I deeply apologize to the public for causing such an incident," Nukaga said.

Makoto Koga, secretary general of the LDP, said he believes Nukaga made a "grave decision" and expressed hope that Aso will do his utmost as his successor.

Koga added that the LDP will delete a clause stipulating that for candidates to be placed on the party's proportional representation roster for next summer's House of Councilors election, they must come up with a list of more than 20,000 party members who support them.

The LDP move apparently comes after revelations that KSD provided the party with lists of new members containing fictitious names in support of Koyama, thus preserving Koyama's elevated position on the LDP's roster of proportional representation candidates.

Opposition leaders stepped up their criticism of the Mori administration over the scandal, saying they will do everything possible to oust the corruption-tainted, LDP-led government.

Democratic Party of Japan leader Yukio Hatoyama said it is a "matter of course" for Nukaga to step down from his post, adding that it will deal a serious blow to the administration.

"The LDP-led government has come to an end and we will overthrow the administration," he said.

Kazuo Shii, head of the Japanese Communist Party, said the incident made clear the insensitive nature of the Mori Cabinet toward corruption and bribery.

As well as his alleged ties to KSD, Nukaga is under attack for his alleged link to a KSD-backed plan to create a university specializing in manufacturing processes.

Last January, the late Prime Minister Keizo Obuchi delivered a policy speech in which he expressed support for the university project. Nukaga, who was deputy chief Cabinet secretary at the time, is suspected of having suggested that the prime minister refer to the project in his speech, allegedly on behalf of KSD.

Takeyama tapped

Yutaka Takeyama was formally chosen Tuesday to lead the assembly of House of Councilors members of the ruling Liberal Democratic Party, replacing Masakuni Murakami, who resigned from the post last week over his ties to scandal-tainted industrial mutual aid organization KSD.

The 67-year-old Takeyama, a former Science and Technology Agency chief, was selected through discussion rather than the traditional vote in order to complete the appointment before the Jan. 31 start of the ordinary Diet session, LDP sources said.

"We must fight hard (in the Upper House election) to maintain a majority in the chamber, where the ruling parties now barely outnumber (the opposition)," he told a regular news conference. The LDP and its coalition partners together have 136 seats in the 252-seat Upper House.

He also admitted that he received 100,000 yen from Homeikai, a political organization affiliated with KSD, prior to the 1995 Upper House election. Although the contribution was dealt with properly, he said, he hopes to somehow return the money to the now-defunct organization.