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Scandal and arrests grip top DPJ members. China and Japan dispute gas fields in the East China Sea. Japan replaces its Indian Ocean military refueling operation with aid to Afghans. JAL files for bankruptcy despite bailouts and government support. Forbes' list of the richest Japanese shows that their combined wealth had risen significantly. Suzuki allies with Volkswagen and ends its relationship with GM. And a notorious mobster is set to be released from prison next year.

Top News:  Less than a year after the party's historic election victory, allegations of a growing political funding scandal are threatening to seriously damage the new DPJ government, enveloping party secretary and backroom kingpin Ichiro Ozawa, over a suspicious 400 million yen ($4.4 million) land purchase in Tokyo.


Ozawa aides – including sitting lawmaker Tomohiro Ishikawa - were arrested following raids on various offices. The DPJ looks set for a historic battle with public prosecutors, on a scale unseen involving a sitting government. Ozawa has been given Prime Minister Hatoyama’s backing, though 67 percent of the public say Ozawa should go, as support for the cabinet falls to 42 percent. 


Investigators believe the 400 million yen payment for the land was funded through bribes from construction companies relating to bids for a dam construction project in Ozawa’s political heartland. If this is true, it makes it a textbook case of the kind of political corruption that the DPJ had promised to end.


Ozawa meanwhile, has suggested the investigation is politically motivated – presumably on the basis that the opposition Liberal Democratic Party did the same kinds of things for half a century while in power, with very few repercussions.


Tensions have been once again mounting between China and Japan over disputed gas fields in the East China Sea, with Foreign Minister Okada threatening to “take certain action” if China violates a 2008 agreement on exploration projects.


January 15 saw the final refueling mission by Japanese ships in the Indian Ocean in support of military operations in Afghanistan, as part of policy shift by the DPJ. Since 2001, Japanese ships from the Maritime Self-Defense Force have refueled ships belonging to the US, Britain and Pakistan 938 times. Japan will now concentrate on humanitarian aid to the Afghans. 


The Supreme Court has upheld the death penalty sentence on the tenth member of the Aum Shinrikyo cult, which was responsible for sarin gas attacks in Nagano and Tokyo in 1994 and 1995 that left a total of 19 people dead.


A Japanese medical team operating in Haiti was criticized by Medicins Sans Frontieres for carrying out only basic cleansing and bandaging of wounds, while avoiding more complicated medical procedures.


Money: Japan Airlines (JAL), the former national carrier and Asia’s largest airline, filed for bankruptcy on Jan. 19 with an estimated pile of debt amounting to 2.3 trillion yen ($25.5 billion), the biggest non-financial corporate failure the nation has ever seen.  Main rival ANA is concerned about the support JAL has received, including huge debt waivers and government-backed credit lines, all following three public bailouts in the past decade.


Cosmetic giant Shiseido is taking over San Francisco-based Bare Essentials for $1.7 billion as it carries on its overseas expansion in the face of a shrinking domestic market.


The Forbes list of the richest 40 Japanese showed their combined wealth had risen from $69.5 billion to $87 billion in 2009 as the stock market recovered. Topping the list for the second year was head of budget clothes chain Uniqlo (Fast Retailing) who added $3.1 billion to his stash. The list also contained Asia’s youngest self-made billionaire, 32-year-old Yoshitaka Tanaka, founder of a mobile social networking and gaming platform, who is now worth $1.6 billion.


Imported US cars are to be eligible for the Japanese cash-for-clunkers program as American data on fuel-efficiency is to be recognized following high-level diplomatic negotiations on the issue. Meanwhile, Suzuki is to tying up with Volkswagen and will end its joint venture projects with GM on hybrids and fuel-cells.


50 publishing companies are putting content from 100 magazines online in a trial system beginning Jan. 27, where customers will be able to buy individual articles, much of it expected to be accessed from mobile phones.


Elsewhere: A 56-year-old woman put her elderly parents up in a hotel for 36 nights, telling the staff the person who would be paying was stuck in America, unable to fly due to the H1N1 virus. She was arrested after failing to pay the 1.6 million yen ($17,600) bill.


The godfather of the nation’s biggest yakuza gang, the Yamguchi-gumi, is set to be released from prison next year and his organizations are already ramping up activities in anticipation.  The gang has already constructed a venue in Kobe to celebrate the release of Shinobu Tsukasa, and is believed to be expanding its financial operations in Tokyo and Nagoya.