Veteran lawmaker Ichiro Ozawa said on Saturday he won’t quit a top post in Japan’s new ruling party despite the arrests of his aides over a growing funding scandal embroiling the Democratic Party of Japan.

The arrests are a fresh blow to a party that has seen a rapid decline in public support following a spate of financial embarrassments, including a $4.4 million fundraising scandal linked to Prime Minister Yukio Hatoyama.

“I will stay on to fulfill my given duty, and squarely fight against such an exercise of power (by prosecutors),” said Mr. Ozawa, who is credited with engineering his party’s landslide victory last August - unseating their rivals who ruled Japan almost without interruption for 50 years. “Our funds have nothing to do with money that is illegal.”

Prosecutors arrested Tomohiro Ishikawa, a 36-year-old Democratic lawmaker who used to be Mr. Ozawa’s clerical aide, for allegedly falsifying accounting records of Mr. Ozawa’s key political funding organization.

Mr. Ishikawa, a lower house member, was arrested on suspicion of violating political funding laws over the origin of about 400 million yen ($4 million) in funds used to buy a plot of land in Tokyo in 2004 - a transaction that prosecutors allege Mr. Ishikawa did not report to cover up dubious donations.

Prosecutors also arrested two other people linked to Mr. Ozawa late Friday and Saturday. One is a current aide who is facing separate charges that surfaced this year of accepting illegal corporate donations from 2003 to 2006.

Mr. Hatoyama said he trusted Mr. Ozawa and urged him to stay on as secretary—general, the party’s No. 2 post, as the party gears up for upper house elections in July. Mr. Hatoyama rose to his post in September, months after Mr. Ozawa resigned as party leader over the corporate donation scandal.

Recent media polls showed support ratings for Mr. Hatoyama’s government plunging to around 50 percent from initial highs of more than 70 percent.

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