Hidden Funds: Consequences of a Corrupt Practice / Abe Faction Lawmakers Relied on ‘Funds Without Receipts’

The Yomiuri Shimbun

21:00 JST, January 21, 2024

Public distrust in politics has grown amid the ongoing scandal involving the creation of hidden funds by factions of the ruling Liberal Democratic Party.

This is the second installment of a series in which The Yomiuri Shimbun looks at the growing sense of crisis among LDP lawmakers, how the practice has been conducted over the years, and the challenges facing the legal system.

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On May 17, 2022, about 2,800 people gathered at a luxury hotel in Tokyo for a political fundraising party held by the Abe faction of the Liberal Democratic Party. The air in the room bubbled with the participants’ enthusiasm.

“With self-confidence and pride that we want to be the foundation of the party, we’ll firmly support the Kishida administration,” said former Prime Minister Shinzo Abe, who led the faction at the time.

After Abe’s address, Prime Minister Fumio Kishida praised the faction, calling it “the LDP’s largest and strongest political group.”

In a corner of the vibrant room, however, the faction’s accounting manager Junichiro Matsumoto, 76, was being pressured by the secretaries of lawmakers belonging to the faction. Matsumoto has since been indicted without being arrested on charges of violating the Political Funds Control Law.

“We’ve sold tickets in excess of our quota,” one secretary reportedly said. “We’ll be in trouble if [the practice] is suddenly stopped.”

Lawmakers each have a quota specifying how many party tickets the faction requires them to sell. In the Abe faction, it has been common practice since the early 2000s to kick back revenue in excess of those quotas to the lawmakers who sold the tickets. Neither the payment nor the receipt of the kickbacks was properly listed on political funds reports.

The kickbacks were reportedly used not just to cover the costs of lawmakers’ political activities, such as secretaries’ salaries, transportation expenses and office rents. The money is also said to have gone for things that would draw public criticism if they were exposed, such as highly expensive meals.

Lawmakers in the faction became increasingly dependent on these “convenient funds that don’t require receipts,” as a lawmaker’s secretary described the money.

The LDP has long faced harsh criticism over issues involving money and politics. In an embezzlement scandal that came to light in 2004, the faction led by former Prime Minister Ryutaro Hashimoto was found to have received ¥100 million in illegal donations. Despite such criticism, the Abe faction continued making off-the-book funds.

“I’m certain it continued as a customary practice,” said an experienced secretary with the faction.

It was Abe himself who suggested discontinuing the practice.

“We should stop the murky practice of returning [revenue] in cash,” Abe reportedly said shortly before the 2022 party. His remarks greatly disturbed the entire faction, leading Matsumoto to be pressured by others at the event.

Two months later, however, Abe was fatally shot at a campaign event, leaving unresolved his plan to stop the kickbacks.

As a result, party ticket sales by faction members in excess of their quotas were not included in the faction’s political funds report that Matsumoto submitted in spring 2023 to the Internal Affairs and Communications Ministry, just as before.

Abe’s plan was scrapped.

It is hard to believe that a rank-and-file official would reverse a decision made by the faction’s head. There are suspicions that influential politicians decided to continue the practice and instructed Matsumoto not to list the revenues in the political funds report.

Investigators may need to look into possible conspiracies with faction executives. Before its probe of the case is finished, the special investigation squad of the Tokyo District Public Prosecutors Office will have to deal with this difficult issue.