Saitama Gov. Yoshihiko Tsuchiya's eldest daughter was arrested Thursday evening on suspicion of hiding 113 million yen in donations paid to her father's political fund management body over five years.
Momoko Ichikawa, 53, was arrested by special investigators from the Tokyo District Public Prosecutor's Office following questioning that started earlier in the day.
The prosecutors also searched Ichikawa's home in Minato Ward, Tokyo. Ichikawa runs a consulting firm in Saitama Prefecture.
The prosecutors also searched the fund management group, which is based in Saitama as well.
Investigative sources said Ichikawa, who serves as an intermediary between the fund management group and her father's supporters, is suspected of failing to report some of the donations the group has received, which would violate the Political Funds Control Law.
They said the case surfaced during investigations into a case involving Duskin Co. Chairman Koji Chiba and two other people who are suspected of misappropriating about 180 million yen of the firm's money.
Ichikawa's firm, Peach, received 10 million yen in a suspicious manner from the major cleaning-equipment firm in the name of market research, the sources said.
Earlier Thursday, Tsuchiya said he felt sorry about the allegations leveled at his daughter but denied he would step down.
"I have no intention of resigning," he said. "I will make my own choice."
Tsuchiya has served as governor of Saitama since 1992.
When Ichikawa's firm was earlier searched in connection with the suspicions over the payment from Duskin, Tsuchiya said he would consider resigning as governor if his daughter was arrested.
Ichikawa's younger sister, Shinako Tsuchiya, 51, is a Liberal Democratic Party member in the House of Representatives. She is in her second term.