• Politics & Government

Profit Margins as High as 90% for Political Fundraising Parties Held by Japan’s Liberal Democratic Party

The Yomiuri Shimbun
Attendees gather at an Abe faction political fundraising party at a hotel in Tokyo in May.

Political fundraising parties held by the ruling Liberal Democratic Party’s factions have been at the center of alleged violations of the Political Funds Control Law. The factions sell party tickets to raise money for their political activities, making such events an important source of funds. The profit margins — the percentage of profit after deducting expenses for holding a party — are high, with some reaching up to 90%. In some cases, large numbers of tickets are sold on the assumption that purchasers will not attend.

Achieving sales quotas

Seiwa Seisaku Kenkyukai, the LDP’s largest faction that is also known as the Abe faction, held a party at a Tokyo hotel on the evening of May 16. At the start of the party, Ryu Shionoya, a former Minister of Education, Culture, Sports, Science and Technology who was the acting faction leader at the time, jokingly said, “There’s not much to offer to those who spent a lot of money for the party,” drawing laughter from the attendees. “I would like to thank you from the bottom of my heart,” Shionoya added as he addressed some 3,000 people who had gathered.

A large amount of money is said to be collected in a single political fundraising party.

A president of a construction company in Osaka Prefecture criticized the parties, saying, “All politicians think about is how they can collect money efficiently.”

The company president purchased a ticket for ¥20,000 yen at the request of an aide to an Abe faction lawmaker and attended a party held at a hotel in Tokyo in September 2020.

According to the company president, the venue was overcrowded and the food was plain, with items such as fried rice on the menu. The person attended the party only for the sake of maintaining good relationships, saying, “It was more of a gathering to raise money than a gathering to discuss policies.”

A local city council member whose city is part of the constituency of a Diet member belonging to Shisuikai, which is led by veteran LDP lawmaker Toshihiro Nikai and known as the Nikai faction, revealed that some local council members are given a quota of 20 tickets to sell.

“If the sales quota is met, the Diet member ‘owes’ us, meaning it will be easier for us to pass local petitions and requests to them,” the council member said. “Parties are a means for politicians to raise funds. There’s nothing wrong with them.”

Major source of income

The Political Funds Control Law prohibits corporations and organizations from contributing to political factions and politicians, thus making parties for individuals the largest source of income for the factions.

The law requires that the names of individuals or entities buying tickets totaling more than ¥200,000 are required to be recorded in political funds reports.

The six LDP factions held parties every year that accounted for 60%-80% of their total income in the five years to 2022. Greater profit can be secured by reducing costs for things like meals and gifts, and each faction’s profit margin reached 70%-90%.

It is alleged that the Abe and Nikai factions returned the cash exceeding party ticket sales quotas to their members and failed to record their income and others in their political funds reports.

The amount of cash kickbacks received by Abe faction members is estimated be around ¥500 million, and over ¥100 million for Nikai faction members, in the five years up to last year. If the income from the unreported amounts is added, the profit margins of the parties held by the two factions go even higher.

The Abe faction sold more tickets to parties than venues could accommodate. The faction held a party once a year at the same hotel in Tokyo and sold tickets to approximately 3,200 to 7,000 people each time, according to its political funds reports for 2018-2022. However, the venue has a capacity of only around 2,000 people, a hotel official said.

“Many companies in rural areas simply pay for tickets but representatives don’t actually go to the party because of the transportation and accommodations costs of traveling far away,” said an aide to an Abe faction parliamentary member.