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A regular Diet session started Monday — less than a week after the chief secretary and two former secretaries of Mr. Ichiro Ozawa, the secretary general of the Democratic Party of Japan, were arrested. The Tokyo District Public Prosecutors Office’s special investigation squad arrested the three on suspicion of falsifying official records of Rikuzankai, Mr. Ozawa’s political funds management organization, in connection with the receipt of ¥400 million and the purchase of land in 2004.

The arrests have plunged the Hatoyama administration and the DPJ into the biggest crisis since the DPJ-led administration came to power four months ago. In fact, the latest survey by Kyodo News shows that for the first time since its inauguration, the Cabinet’s approval rating (41.5 percent) is lower than its disapproval rating (44.1 percent).

Opposition forces are set to launch a strong offensive in the Diet over the suspected violation of the Political Funds Control Law by Mr. Ozawa’s staffers. Debate in the Diet over this matter could stall discussions on important issues such as the second fiscal 2009 supplementary budget and the fiscal 2010 budget, measures to stabilize employment, and the relocation of the U.S. Marine Corps’ Futenma Air Station in Okinawa Island. Given the economic downturn, such distractions could deepen people’s concerns about their livelihood. Depending on how events develop, people could lose trust in the Hatoyama administration and the DPJ.

Mr. Tomohiro Ishikawa, a DPJ Lower House member and a former secretary to Mr. Ozawa, has been arrested on suspicion of falsifying records about ¥400 million in cash he received from Mr. Ozawa. The cash (which Mr. Ikeda’s lawyer has claimed was inherited by Mr. Ozawa from his father) was allegedly used to purchase a 476-sq.-meter plot in Setagaya Ward on Oct. 29, 2004, for ¥340 million. Mr. Ishikawa is suspected of failing to record two transactions in a financial report for 2004: the ¥400 million income; and an outlay of ¥352 million, which included the purchase of the land. Also curious is that Mr. Ozawa reportedly took out a ¥400 million bank loan several hours after the payment was made for the land.

Public prosecutors apparently suspect that included in the ¥400 million was a donation of ¥50 million secretly received by Rikuzankai from Mie Prefecture-based Mizutani Construction Co., a subcontractor of general contractor Kajima Corp. Mr. Ishikawa denies receiving such a donation.

Meanwhile, the other former secretary arrested, Mr. Mitsutomo Ikeda, is suspected of falsely recording the outlay of ¥352 million in a report for 2005. It is also suspected that he conspired with Mr. Takanori Okubo, the chief secretary, to omit another separate outlay of ¥400 million from a report for 2007.

Mr. Okubo is already being prosecuted on a separate charge of camouflaging donations of ¥35 million to Rikuzankai from Nishimatsu Construction Co.

At a DPJ convention Saturday, the day after Mr. Ishikawa’s and Mr. Ikeda’s arrest and the day of Mr. Okubo’s, Mr. Ozawa publicly criticized the prosecutors, saying the arrests were deliberately timed to coincide with the party convention and that he could not let that go unchallenged. He went on to say, “If this is accepted, Japan’s democracy has gloomy prospects. . . . I am firmly determined to fight this method of doing things, following my beliefs.”

Mr. Ozawa said that, in the past, authorities accepted the correction of “these kinds of perfunctory mistakes” in political funds reports. He stressed there was nothing to hide regarding the ¥400 million in question, adding that he had given prosecutors the name of the bank branch where his account is held, and that they had obtained the necessary information.

At the convention, Prime Minister Yukio Hatoyama supported Mr. Ozawa, saying he should continue as party secretary general: “I request that without flinching, (Mr. Ozawa) explain his innocence and devote all of his energy to executing his job.” The prime minister also told reporters that he had told Mr. Ozawa in person to “fight on.”

This shows that Mr. Hatoyama has decided to share the same fate as Mr. Ozawa and that the two leaders are at war with the prosecution — a move that could cost Mr. Hatoyama and the DPJ a lot depending on future developments.

The situation doesn’t look good for Mr. Ozawa. For example, Mr. Kei Kanazawa, a former secretary of Mr. Ishikawa — speaking at a meeting sponsored by the Liberal Democratic Party — described how Rikuzankai staffers hid documents immediately before the search conducted by prosecutors on March 3, 2009, in connection with the Nishimatsu Construction Co. donations.

Mr. Ozawa can save himself, Mr. Hatoyama, the DPJ and the administration by explaining publicly the details of the ¥400 million in question and of the loan. If his words are sufficiently convincing, they could devastate the prosecution’s credibility.

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