Tokyo Governor Naoki Inose arrives at a news conference at Tokyo Metropolitan Government Office in Tokyo December 19 2013
Tokyo governor Naoki Inose

Naoki Inose, the governor of Tokyo and the driving force behind the city’s successful 2020 Olympic bid, said on Thursday he would resign over a money scandal.

The author-turned-politician, elected a year ago with record voter support, had been under mounting pressure to quit after it emerged in November that he had accepted a Y50m ($480,000) loan from the founder of a hospital group at the centre of an investigation over electoral violations.

“Preparations for the Olympics and Paralympics, on which the nation’s honour depend, must not be hindered,” Mr Inose told a news conference in explaining his decision to step down. “I have no choice but to relinquish the governor’s position.”

It was an abrupt fall for a self-described “amateur” politician who celebrated Tokyo’s Olympic selection in Buenos Aires in September alongside athletes, celebrities and national political leaders. Shinzo Abe, the prime minister, on Thursday described the resignation as necessary but “regrettable”.

Mr Inose won praise for his work as chairman of the bid committee, as well as sympathy: his wife died of a brain tumour a few weeks before the selection was announced, but Mr Inose kept up his hectic lobbying schedule and said little in public about her death.

For all his popularity, however, Mr Inose was unable to satisfactorily explain why he accepted and then failed to disclose the large, interest-free loan from the founder of the Tokushukai group, Torao Tokuda. Six senior managers of the group, including Mr Tokuda’s wife and two of his daughters, have been indicted on charges related to the election of Mr Tokuda’s son, Takeshi, to parliament in 2012.

Mr Inose on Thursday reiterated his claim that the loan was for personal use and did not constitute a political contribution, which he would have been legally required to report. He said he now believed he “should not have borrowed” the money, which he has repaid, and described the action as an innocent lapse committed by a political newcomer.

“I failed as a professional politician,” he said.

Mr Inose’s already tenuous hold on his job had weakened on Wednesday after it was reported that he had spoken with Torao Tokuda about the group’s interest in buying a hospital owned by Tokyo Electric Power, the quasi-monopoly utility, which is part-owned by the Tokyo metropolitan government.

Mr Inose initially denied having the conversation, but he altered his story on Thursday, saying that after seeing a television news report about the incident, he now believes it may have occurred. He denied asserting any influence over asset sales by Tepco, which is raising cash to ease the financial strain caused by the 2011 disaster at the Fukushima Daiichi nuclear power plant, which it owns.

The Tepco hospital was ultimately sold to a real estate company, not to Tokushukai.

According to Japanese media, Tokushukai has extended financial support to a number of conservative political figures, though so far no senior national-government figure has been touched by the scandal.

Torao Tokuda, in addition to founding what is now Japan’s largest private hospital chain, with 66 hospitals and many more smaller clinics, served four terms in Japan’s parliament, retiring in 2005. Prosecutors say that during a national election last year Tokushukai illegally deployed hundreds of staff to campaign for Takeshi Tokuda, his son and political heir.

Takeshi Tokuda, who won his father’s old seat, was forced to leave the ruling Liberal Democratic party after the investigation came to light in September.

Mr Inose had been deputy to Shintaro Ishihara, a controversial but popular rightwinger who quit the governorship to found a national political party. Before being elected governor in 2012, Mr Inose said Mr Ishihara had privately urged him to resign over the Tokushukai affair, as had senior members of Japan’s Olympic movement.

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