The winning bid was significantly higher than the 2.69 billion yen that the Tokyo District Court had estimated as the property's value.

The government-backed Resolution and Collection Corp sold off the building in an effort to recoup loans amounting to more than 62 billion yen that it had extended to the residents' association.

Ikeguchi announced immediately that the building would be leased back to Chongryon, which also acts as the diplomatic mission for North Korea in Japan.

"We will keep the building as it is and make it a base of harmony for ethnic groups in Asia, including North Korea," he said.

But activists monitoring North Korea's human rights situation and efforts to earn hard currency to fund the nation's nuclear weapons and missile programmes point out that Ikeguchi has connections with several unsavoury groups and was arrested in 1961 for an attempted coup d'etat against the Japanese government.

"It is no secret that Ikeguchi has strong connections with Nihon Seinensya, the biggest far-right group in Japan," said one expert looking into the priest's contacts and colleagues. He pointed out that Ikeguchi's temple in Enoshima hosted Nihon Seinensya's annual conference last year.

The people interviewed for this story requested that they stay anonymous out of fears they could be targeted by any of the organisations identified.

Nihon Seinensya is under the control of the Sumiyoshi-kai, Japan's second-largest underworld group, with an estimated 5,900 members, according to the Japanese police. It is involved in a wide range of illegal activities.

The group was founded in 1969 by Kusuo Kobayashi, one of the most powerful and feared yakuza bosses in Japan, and the current president of the underworld group Hareaki Fukuda hails from the Kobayashi faction.

Both Sumiyoshi-kai and Fukuda have been designated for sanctions by the US government on the grounds that the organisation is "involved in serious criminal activities, including weapons trafficking, prostitution, human trafficking, drug trafficking, fraud and money laundering".

The head of Sumiyoshi-kai, Shigeo Nishiguchi, is supreme adviser to Nihon Seinensya - a fact that was brought up in the upper house of the Diet in June 1996 - while he, in turn, receives advice from Ikeguchi.

As well as consorting with leading figures from Japan's underworld, Ikeguchi has served as honorary president of the Asian Area War Dead Memorial Association, while a photo taken at the organisation's New Year party in 2004 also clearly shows a man known in Japan as Masahiro Namikawa.

Namikawa is the name that is used by Pak Jeong-ho, the Korean head of the Kyushu Seidokai, which is designated as one of the most dangerous yakuza groups in Japan.

To fund the purchase of the former Chongryon headquarters, Ikeguchi said he planned to borrow money from a bank, although by law, Japanese banks are not permitted to have dealings with gang members or their associates.

There have been no reports of whether the funding for the deal has been put in place or if Ikeguchi has managed to secure finances from other sources.

Over the years, he has been wise enough to secure political patronage, with Yukio Hatoyama, the former prime minister and head of the Democratic Party of Japan (DPJ), commenting on a religious ritual that he took part in with Ikeguchi in 2002.

Naoto Kan, another former prime minister and leader of the DPJ, which was defeated in a general election in December, also had what one analyst termed a "murky relationship with North Korea" and donated 62.5 million yen to a communist group with close ties to North Korea.