‘Off-the-Books Funds’ May Have Been Routine in Abe Faction; Ruling Party Group Has Come Under Scrutiny by Prosecutors

By Kisho Tokuyama and Tetsuya Okabe / Yomiuri Shimbun Staff Writers

21:00 JST, December 2, 2023

The special investigation squad of the Tokyo District Public Prosecutors Office is investigating the Abe faction, the largest faction of the Liberal Democratic Party, on suspicion that it improperly returned part of the proceeds of ticket sales for political fund-raising events to faction members. The squad is considering prosecuting the case as a violation of the Political Funds Control Law.

The amount of proceeds omitted from or falsely stated in income and expenditure reports on political funds is estimated to have reached several hundred million yen over the past five years. It is possible that “off-the-book funds” have been a regular practice at the faction.

Each member given quota

“We will examine the facts closely from now on.”

Ryu Shionoya, the de facto head of the Abe faction, spoke to reporters laconically at the Diet on Friday about the alleged flow of portions of ticket sale proceeds to its members.

The faction provides its members with money ranging from ¥500,000 to several million yen in the summer and winter to support their political activities. It also supplies funds to legislators in close races in elections.

The main source of income is fund-raising parties. The Abe faction assigns each member a quota of party tickets to sell, with each ticket worth ¥20,000. Depending on the number of times they have been elected, junior members, for instance, are assigned to sell 20 to 30 tickets, middle-ranking members about 70 tickets, and veterans and those who have held cabinet posts sometimes over 300 tickets.

“After selling tickets for my own fund-raising party, it is difficult to ask people to also buy tickets for the party to be held by our faction. We can barely meet our quota,” one House of Councillors member said.

Yet, an official related to the faction said that some legislators have received a kickback — of the amount by which they surpassed their quota — from the faction. A veteran member of the faction explained that returning funds above the quota to legislators is “to motivate them to sell more party tickets.”

Omissions by legislators, too?

The Political Funds Control Law requires that income and expenditure reports include not only the total proceeds from party ticket sales but also the names and amounts in cases when individuals and companies purchased ¥200,000 or more worth of party tickets.

There would be no problem if the Abe faction had accurately entered all of its income and expenditures — even including the kickbacks — on its reports. However, there was no entry at all of money above the quota, and it is also suspected that the proceeds over the quota have not been reflected in the total income.

Furthermore, from the perspective of the faction members, the kickbacks are considered “donations” from the faction. This would be fine if each member’s political organization recorded them as donations. But in the case of the Abe faction, it is believed that the members did not enter them into their own reports, either.

Some say such omissions were merely administrative errors, as the flow of funds was complicated by the fact that, for instance, the legislators received cash from ticket purchasers and transferred only their quota to the faction.

However, many within the party suspect that off-the-book funds were created systematically.

A young LDP member pointed out that the money may have been used for entertainment expenses such as wining and dining lower ranking Diet members or to build comaraderie. A member of another faction also said, “It is probably a system to keep the money hidden and create funds that are easy to use.”

Was it ‘deliberate’?

The Abe faction is suspected of failing to enter the funds properly or making false entries into the reports, for amounts totaling several hundred million yen over five years up to 2022.

The suspicions of the special investigation squad were aroused in part by a university professor who noted discrepancies regarding LDP factions’ income and expenditure reports.

In the course of the investigation, the suspicion of kickbacks within the Abe faction came to the surface.

If it can be shown that the kickbacks were deliberately omitted from the income and expenditure reports, the prosecution of cases against both the faction and the legislators will become possible.

The investigation from now on will focus on elucidating how the funds beyond the quota came to be returned to faction members, and will also look into communications with the ticket purchasers.

The extraordinary session of the Diet will end on Dec. 13, with the regular session to begin in January or later. The special investigation squad is expected to be aware of the political schedule as it proceeds with its probe.

Political fund-raising parties have always been criticized for their high anonymity and opaque flow of funds, compared to political donations, for which donors’ real names must be reported if their donations exceed ¥50,000 a year.

Tomoaki Iwai, a professor emeritus of political science at Nihon University who is knowledgeable about political funds, said the alleged behavior may be related to the concept that “bringing in more proceeds than the quota shows loyalty to the faction.”

As for how the fund-raising parties should be regulated by law, he said, “It is necessary to establish a system enabling detailed checks of expenditures and income after the fact, thereby reviewing the way the politicians collect funds.”