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More than 100 million yen was channeled to two firms run by the eldest daughter of Saitama Gov. Yoshihiko Tsuchiya over a five-year period starting in 1998, sources said Monday.

The daughter, Momoko Ichikawa, 53, was arrested Thursday on suspicion of hiding more than 100 million yen in contributions to her father’s political fund-managing body between 1998 and 2002.

Tsuchiya submitted his letter of resignation to the head of the prefectural assembly Monday morning.

Investigative sources said Ichikawa used one of the firms, Peach, as the receiver of funds disguised as consultancy fees from companies that supported the governor, while the other, a market research firm based in Meguro Ward, Tokyo, called Plus T, handled funds that were diverted from his political fund-managing body.

Special investigators with the Tokyo District Public Prosecutor’s Office suspect that Ichikawa not only siphoned money off the fund-managing body but also used Tsuchiya’s political clout to amass money from entities that supported her father to use as operating funds for her own companies and make up for losses on her stock investments.

Investigators are now trying to determine whether the governor was aware of his daughter’s actions. Tsuchiya has repeatedly denied involvement in any wrongdoing.

It was also learned that starting in 2000, Tsuchiya’s fund management body asked industry organizations to make donations as individual contributions of less than 50,000 yen. Such donations are not required under existing laws to be included in political fund reports.

The Saitama Prefectural Assembly plans to hold an extraordinary session sometime this week to formally approve Tsuchiya’s resignation, and a by-election must be held within 50 days after the prefectural election administration committee is informed of the vacancy. Sources in the prefectural government said the election will probably be held sometime in late August.

Meanwhile, the National Governors’ Association said Monday that Tsuchiya will lose his position as association president when he resigns as governor.

Association rules stipulate that the president must be a governor, and Tsuchiya will automatically lose the post if his resignation letter is accepted by the prefectural assembly.

Tsuchiya became president of the association, an organization of the nation’s 47 governors, in November 1996 and is currently in his third term.

At the association’s meeting scheduled for Thursday in Takayama, Gifu Prefecture, Toyama Gov. Yutaka Nakaoki, vice president of the association, will act as moderator because Tsuchiya is not expected to attend.

The political funds scam surfaced while Tokyo prosecutors were investigating Duskin Co., an Osaka-based company that runs a cleaning equipment franchise and restaurant services, on suspicion of misappropriating corporate funds.

Tsuchiya, who was first elected Saitama governor in 1992, was House of Councilors president between September 1988 and October 1991 and once served as a Cabinet minister in charge of the Environment Agency, now the Environment Ministry.

His second daughter, Shinako Tsuchiya, 51, a House of Representatives member in the ruling Liberal Democratic Party, is currently serving her second term.