Saburo Sato, a 61-year-old secretary to Koichi Kato, former secretary general of the Liberal Democratic Party, accepted money from construction firms for approving their bids for public works projects in Yamagata Prefecture, sources close to the case said Saturday.

The reward for influence-peddling was between 3 percent and 5 percent of the budgets of the public works projects, they said.

It was not immediately known whether Kato was aware of Sato's actions.

Most of the money that Sato is suspected of having avoided paying taxes on was generated in this way, the sources said, adding that the payoffs from contractors totaled several hundred million yen over the last three or four years.

Tax authorities have raided Sato's house and company in Yokohama in an investigation into the concealment of hundreds of millions of yen in income.

Kato himself received about 20 million yen in political donations from five companies in the prefecture, including two being investigated by authorities for tax evasion, according to a government report on political funds.

Shakai Keikaku Kenkyukai, an organization in charge of managing Kato's funds, received the money from the five firms and members of their boards over the past three years, the report states.

Sato himself also donated 3 million yen to the organization in the last three years. He was known as the "money man" for Kato, who remains an influential member of the ruling LDP.

Asked by reporters about the allegation on Friday, Kato denied receiving donations from the firms and said he was not involved in any wrongdoing.

The report shows that Hirao Komuten, a construction firm in Sakata, Yamagata Prefecture, donated 720,000 yen to Shakai Keikaku Kenkyukai in the three years to March 2001, and its president and two board members gave 9 million yen.

Sato Komu, a contractor in the town of Tsuruoka, gave 500,000 yen, while its president and three board members donated 4.6 million yen.

Tax authorities questioned the three other firms or told them to submit documents. The report shows they gave 2.04 million yen to Shakai Keikaku Kenkyukai and individuals affiliated to them donated a further 2.9 million yen.

Kato, who comes from Tsuruoka, was re-elected to his 10th term in the 2000 Lower House election from Yamagata's No. 4 single-seat constituency, which covers Tsuruoka and Sakata.

On Thursday, the Tokyo Regional Taxation Bureau searched Kohsho Co., a Yokohama-based harbor transportation company headed by Sato, as well as Sato's home in connection with a tax evasion scandal involving a talent agency that manages numerous Japanese stars.