The revelations about
the trade minister come as a blow for Prime Minister Shinzo Abe after
his cabinet suffered two high-profile resignations this week over
separate funding scandals.

Yoichi
Miyazawa, a veteran politician and nephew of a former prime minister,
was picked to head the trade ministry on Tuesday after the resignation
of his predecessor, Yuko Obuchi, over allegations that her support
groups misused political funds.

Justice Minister Midori Matsushima resigned the same day over unrelated allegations of election-law irregularities.

Abe's
administration has been pushing to restart nuclear plants more than
three years after the devastating Fukushima disaster. As the head of the
powerful trade and industry ministry, Miyazawa will be in charge of key
decisions on energy policy and the reopening of idled reactors across
Japan.

Miyazawa, 64, said
he learned from news reports of the 18,230 yen ($170) that the support
group spent at the sadomasochism-themed bar in his political district of
Hiroshima.

"There's no
way we can classify expenditure at such a place as political spending. I
think it was handled inappropriately," Miyazawa said during a group
interview with Reuters on Thursday. He called the incident
"embarrassing" and said he did not go to the bar himself.

Kyodo
News said the support group Miyazawa-kai had made the payment on Sept.
6, 2010, labeled "entertainment expense", according to a political
finances report.

Abe's
first term between 2006 and 2007 was marred by a string of resignations,
a pension records scandal, and a minister's suicide that eroded his
support. Eventually, he quit in the face of parliamentary deadlock and
ill-health.

Miyazawa also
admitted on Thursday to owning shares in the de facto nationalized Tokyo
Electric Power Co, the operator of the destroyed Fukushima plant
that the trade ministry oversees.

While
it is not illegal for him to hold such shares, it is customary in Japan
for politicians to divest them when assuming a cabinet post.

Miyazawa's holding of 600 Tokyo Electric shares is worth more than $1,800, based on the utility's current stock price.

Atsuo
Ito, an independent political analyst, said the revelation about the
shares would be a distraction for a government already grappling with
tough decisions.

"Even if
it doesn't lead to his resignation, it takes energy away from the
administration's difficult policies, such as raising the sales tax and
restarting nuclear reactors," Ito said.

"The
ruling party wants to avoid further resignations. But this could be a
repeat of the first Abe administration that was heavily criticized by
the public when he defended his ministers for a long time, even after
scandals."

Chief Cabinet
Secretary Yoshihide Suga told a news conference he had heard from
Miyazawa over the bar bill, saying the minister would deal with the
problem appropriately.

In
the interview, held at his new office in the ministry, Miyazawa said he
would not sell his shares in the beleaguered utility, instead choosing
to put them in a trust.

"Honestly
I did consider selling them, but I thought it was my responsibility as a
politician to hold them (shares) as we are in a situation where we have
to deal with compensation, decommission and contaminated water issues."

Koichi
Nakano, a professor at Sophia University and a frequent critic of Abe's
government, said revelations about Miyazawa's ownership of Tepco shares
were more troubling.

"It damages his credibility as the minister in charge of (reactor) restarts."

(Reporting by Mari Saito, Linda Sieg and Kentaro Hamada, Additional reporting by Elaine Lies; Editing by William Mallard, Robert Birsel and Clarence Fernandez)