TOKYO - Executive members of the Democratic Party of Japan (DPJ) on Tuesday decided to suspend its former leader Ichiro Ozawa following his indictment last month over a funds scandal.

Following a meeting of the DPJ ethics panel earlier Tuesday at which Ozawa contested the decision claiming that there was "no rational reason why he should be suspended," the ruling party's Standing Officers Council approved the suspension.

The news of the political heavyweight's punishment was made public by the party's secretary-general Katsuya Okada at a news conference in Tokyo.

The suspension will last until the end of Ozawa's trial, which is expected to begin as early as September.

Until then the architect of the DPJ's rise to power will not be allowed to attend formal party functions and could fail to get the party's backing when election time comes, officials said.

"I have done nothing to be ashamed of and my innocence will clearly be proven in court," Ozawa, who was indicted on January 31, was quoted as telling the ethics panel Tuesday,

He said that his trial under Japan's new civil-based arraignment system was flawed as he had not been charged by prosecutors who were convinced of his culpability, but by regular citizens.

Ozawa said the judicial panel of citizens had no choice but to proceed with the mandatory indictment having twice found his involvement in false reporting by his political fund management body to be credible.

Ozawa highlighted the fact that prosecutors had already dropped the case due to a lack of evidence.

Ozawa, 68, has persistently denied any wrongdoing but now faces charges of violating the Political Funds Control Law for the alleged false reporting by his political funds management body, called Rikuzankai.

In 2004 and 2005, Rikuzankai reputedly spent 340 million yen (4. 13 million US dollars) to purchase land in Tokyo and failed to book 400 million yen (4.86 million US dollars) it received in loans from Ozawa.

Since then, three former secretaries of Ozawa have been indicted in connection with the scandal and the case has contributed to public support for Prime Minister Naoto Kan and his Cabinet falling to an all-time low.

Added to this, Ozawa's suspension has punctuated a growing divide within the DPJ, with a coterie of 16 pro-Ozawa lawmakers announcing Thursday that they would seek to leave the DPJ's bloc in the House of Representatives and possibly oppose Kan's bid to raise the 5 percent sales tax.

Already facing plunging public support, Kan has yet to garner the opposition bloc's endorsement of his key 92.4 trillion yen (1. 1 trillion US dollars) budget, increasing the possibility that he will have to dissolve the parliament and call a snap election.

Ozawa's prosecution could also provide opposition parties with further leverage in an already divided parliament to block other key bills trying to be passed by the beleaguered prime minister, aimed at bolstering Japan's anemic economy.