Unreported Funds — The dark side of factions / 100-Strong Prosecutor Team Pours Cold Water on Optimistic Mood of Japan’s Political Hub

The Yomiuri Shimbun

21:00 JST, December 22, 2023

This is the third and last installment of a series about the dark side of Japan’s political factions, examining unreported funds accumulated from political fundraising parties.

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Tensions resurfaced Thursday within the ruling Liberal Democratic Party following news that the Tokyo District Public Prosecutors Office’s special investigation squad had requested the voluntary questioning of former Chief Cabinet Secretary Hirokazu Matsuno.

“We’ll try to delay next year’s ordinary Diet session as much as possible in hopes that the prosecutors will have settled the matter by then,” one disgruntled lawmaker said.

The LDP is said to be planning to put off opening the Diet session until late January — just in time for the fiscal 2024 budget to be passed within the current fiscal year that ends March.

Seiwa Seisaku Kenkyukai, known as the Abe faction, and Shisuikai, known as the Nikai faction, are suspected of providing their members with cash amounts equivalent to excess from allotted quotas for party ticket sales, while failing to include such monies in their political funds reports. The scandal has severely rocked Prime Minister Fumio Kishida’s administration, which is already contending with low approval ratings.

Public scrutiny is set to intensify as Matsuno and other veteran lawmakers who have served in Cabinet posts are questioned. The government could be further weakened if opposition parties pursue the allegations once the Diet convenes.

The atmosphere in Nagatacho — the nation’s political hub — has darkened considerably since Nov. 21, when the Diet first began discussing the allegations. “Assertions about hidden funds aren’t appropriate,” Kishida said at the time.

Questions of accountability

Matsuno and others who served as Abe faction’s secretary general have all denied involvement in accounting-related issues, telling those around them that they had not so much as set eyes on the faction’s bankbooks. Nevertheless, they are seen as having some accountability vis-à-vis the financial scandal.

One focus of attention is a person listed as a treasurer in the Abe faction’s political funds report. Referred to as “a serious man with a practical mind,” the individual in question hails from a private sector background but is neither a professional accountant nor a politician. Questions have arisen regarding whether such a person could orchestrate the creation of hidden funds by dispensing nonreported kickbacks.

In recent years, secretaries general of the Abe faction have included Matsuno; former Economy, Trade and Industry Minister Yasutoshi Nishimura; and LDP Diet Affairs Committee Chairperson Tsuyoshi Takagi, all of whom have held key posts within the government or the LDP. One political insider said it was “impossible that successive secretaries general, who oversee factional management, were unaware [of the kickbacks].”

This year, a secretary of an Abe faction member personally became aware that the group’s secretary general strictly controlled the faction’s finances: After purchasing several faction-related items, the secretary asked the administrative office for reimbursement, but was met with reluctance. “We need an ‘OK’ from Mr. Takagi,” the secretary was told.

Kishida’s decision to replace Matsuno and the other ministers on Dec. 14 stemmed from concerns that “the impact on the administration could be immeasurable” if incumbent ministers were to be questioned.

Kishida’s aides have addressed such fears, with one opining, “Certain Diet members may have to hand in their Diet pins over cases involving the acceptance of large kickbacks.”

Resignations of lawmakers will be a blow to Kishida’s administration, and if that happens before mid-March, by-elections will have to be held in April, causing further headaches for senior LDP members.

If numerous lawmakers leave their posts, by-elections will jump in number, creating a strong headwind for the LDP.

Many within the ruling parties are now skeptical that a House of Representatives election is imminent. “We’re not in a situation wherein we can dissolve the lower house,” Komeito leader Natsuo Yamaguchi noted.

A former Cabinet member who belongs to the LDP said, “At this stage, very few lawmakers expect Kishida to serve as the face of an election campaign.”

‘Serious case’

The Tokyo District Public Prosecutors Office has been conducting investigations on an unprecedented scale. Earlier this month, it assembled about top prosecutors from across the nation, many of whom have experience with political cases, including that involving former Justice Minister Katsuyuki Kawai and Tsukasa Akimoto, who served as state minister for integrated resorts.

One investigator said, “The setup reflect the prosecutors’ seriousness.”

The investigators have formed teams to question numerous people, including secretaries of faction executives and lawmakers who allegedly received large kickbacks.

The building of the Public Prosecutors’ Office, hotels and other locations are being used for the questioning sessions, and there reportedly have been occasions on which Diet members’ secretaries have bumped into each other.

Prosecutors believe the Abe faction customarily failed to report the kickbacks while directing the secret pooling of funds. Most of the faction’s 99 members are believed to have received suspected off-the-book cash, ranging from several tens of thousands of yen to over ¥50 million.

Clarifying the facts and criminal responsibility will take time, taking into consideration conspiratorial intentions and the amounts involved in the unreported funds. While the investigation is said to be proceeding apace, it is not expected to conclude anytime soon.

Clockwise from top left: The Public Prosecutors Office building; former Chief Cabinet Secretary Hirokazu Matsuno; prosecutors head to the office of the Abe faction; and prosecutors enter a building that houses the Nikai faction’s office.