Yoshitaka Ikeda became the first lawmaker arrested in the latest political fundraising scandal involving the Japanese ruling Liberal Democratic Party's largest faction, further blurring Prime Minister Fumio Kishida's political fate.

Kishida, whose popularity has already reached its lowest level since taking office in October 2021, will try to restore the public's trust in politics by setting up a "political reform" panel, which he will lead, within the LDP in the not-so-distant future.

House of Representatives member Yoshitaka Ikeda. (Kyodo)

He has also expressed an eagerness to deepen discussions to revise the political funds control law, which has often been criticized for containing loopholes that enabled lawmakers to generate slush funds that might have been used for election campaign activities, including vote-buying.

But it remains uncertain whether Kishida can drive substantial reforms to improve the transparency of the LDP's factions and political fundraising. His leadership is increasingly seen as weakening, with speculation mounting that he might be forced to resign as early as the spring.

In addition, a scenario where more lawmakers are arrested in connection with the recent political fundraising scandal could lead to growing calls for Kishida to dissolve the House of Representatives, paving the way for a snap election and allowing voters to reject politicians perceived as tainted by receiving dubious funds.

If Kishida signals his intention to make such a decisive political move, many lawmakers might seek to oust him, believing it would be challenging for the LDP to win a potential lower house election under his leadership.

"No matter how the situation develops down the road, the prime minister cannot regain his support from the public and cannot reform political funds issues," one of the LDP lawmakers said.

"What he can do is to take full responsibility for the funds scandal, which is certain to be scrutinized" in the upcoming ordinary parliamentary session scheduled to be convened later this month and "make way for the next person," the lawmaker added.

On Sunday, Ikeda, a lower house lawmaker, was arrested on suspicion of having received a total of 48.26 million yen ($333,000) over five years through 2022 from slush funds created by the faction formerly led by the late Prime Minister Shinzo Abe.

The intraparty group, which Ikeda belonged to, allegedly failed to declare in political funding reports hundreds of millions of yen in fundraising party revenue transferred to its members, sources close to the matter said.

Other factions within the LDP, headed by Kishida, have also been suspected of having engaged in similar conduct, with prosecutors questioning former LDP Secretary General Toshihiro Nikai, a party heavyweight, voluntarily.

As the funds scandal has increased political distrust among voters, Kishida pledged at a press conference on Thursday to establish the reform panel to decide rules to boost the LDP's factions' transparency and strengthen the ruling party's governance.

Japanese Prime Minister Fumio Kishida holds a New Year press conference at the premier's office in Tokyo on Jan. 4, 2024. (Kyodo) ==Kyodo

Later, however, Kishida was criticized by opposition parties for picking former Prime Minister Taro Aso, the LDP vice president who is the leader of another powerful faction, as an adviser to the panel.

Kenta Izumi, chief of the main opposition Constitutional Democratic Party of Japan, told reporters, "People are wondering what kind of discussions and proposals will come out" of the panel, which will be operated by the "boss who has run an LDP faction."

"I don't think the public has any expectations for the panel," Izumi said, urging Kishida to prioritize punishing LDP lawmakers suspected of having amassed slush funds in violation of the political funds control law.

Takashi Mikuriya, a professor emeritus of political science at the University of Tokyo, said the prime minister is in a "miserable plight" with his Cabinet's approval ratings continuing to plunge.

"Rather than being compelled to step down while being told that he will not be the face of the next election, why doesn't he take on the funds issues and show his willingness sacrifice himself?," Mikuriya said, calling on Kishida to specify how to tackle the scandal.

Yasunori Sone, a professor emeritus of political science at Keio University, said the scandal has "provided a window of opportunity not only for the LDP but also for the ruling and opposition parties to advance discussions on political reforms."

Nevertheless, some LDP lawmakers said Kishida may resign as prime minister shortly after an initial budget for the fiscal year from April 2024, which usually takes place annually in March, is passed in parliament.

If he really wants to proceed with political reforms under his leadership, he might dare to dissolve the lower house as a gamble to rebuild his government by asking voters to refresh lawmakers ahead of the LDP presidential race slated for around September.

Another LDP lawmaker has vehemently opposed the potential move, saying, "We do not think our party can win the general election under Kishida. We would like him to leave without taking any risks."

Related coverage:

Japan ruling party lawmaker Ikeda arrested over slush fund scandal

Japan PM forced to rely more on "kingmaker" Aso amid funds scandal

Japan PM vows to establish rules to boost transparency of LDP factions