Your Party leader Yoshimi Watanabe will step down as president of the minor opposition party he founded in the midst of a scandal involving ¥800 million in unregistered loans from a business tycoon.

At a news conference Monday, Watanabe maintained there was nothing illegal about the loans from DHC Corp. Chairman Yoshiaki Yoshida. Instead, he said he was resigning because “I have caused big trouble” to party members and others.

“It is true I caused big trouble to many people,” Watanabe said in a video clip aired by NHK.

“I, as the party president, am now searching my soul. I’m the one to be held responsible,” he said.

Also at the conference, Watanabe said he had earlier in the day transferred the ¥550 million he still owed to Yoshida’s bank account.

DHC Corp. is a major cosmetics company.

Watanabe’s resignation is likely to deal a political blow to Prime Minister Shinzo Abe. As Your Party leader, Watanabe had backed a number of Abe’s key policy proposals in the Diet.

While the full fallout from the resignation has yet to be felt, it’s almost certain the opposition parties will realign.

Yoshida reportedly lent Watanabe ¥300 million shortly before the 2010 House of Councilors election and another ¥500 million before the 2012 House of Representatives election.

Neither loan was logged in Watanabe’s official political or election funds reports, a possible violation of the law.

Watanabe has insisted the money was for personal expenses, not official political activities or election campaigns.

But his failure to provide details of where the money went has only drawn even harsher criticism from the public and many party members.

The money scandal was first reported by weekly Shukan Shincho last month. In the article, Yoshida was quoted as saying he extended the loans to Watanabe for election campaigns, not for private purposes as claimed by Watanabe.

Party members, most notably Secretary-General Keiichiro Asao, have put pressure on Watanabe to resign to reduce political damage to the party and party members.

Party executives were set to meet Tuesday to discuss Watanabe’s money scandal.

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