Incomplete Deal over Political Reform in Japan

Promises to keep

By Takuya Nishimura, Senior Fellow, Former Editorial Writer for The Hokkaido Shimbun
The views expressed by the author are his own and are not associated with The Hokkaido Shimbun
You can find his blog, J Update here.
May 12, 2024. Special to Asia Policy Point

Facing public criticism over the slush fund scandal, the Liberal Democratic Party (LDP) and its coalition partner, Komeito, on May 9 reached a rough agreement on reforming regulations governing political funds.

Although they agreed on new rules for greater transparency, both parties failed to agree on specific measures that are essential for the restoration of public confidence in politics. The limited reforms are unlikely to encourage voters to hold a better view of Prime Minister Fumio Kishida’s leadership skills or to increase their support of him. Thus, it seems likely that the LDP and Komeito will continue their discussions to bridge the gaps.

The two parties basically agreed to hold each lawmaker more accountable for the management of political funds. A new rule would require a lawmaker to submit a “certification” of his political funds report. If an accounting manager failed to account for funds properly and was found guilty in a court, and meanwhile the certification was found incorrect, the lawmaker could lose his Diet membership.

LDP and Komeito also agreed to lower the threshold for disclosing the identities of purchasers of fundraising party tickets and the value of the tickets—but they did not agree on a new threshold. Currently, a political organization must report the name of any contributor who purchases tickets worth 200,000 yen or more.

A new, lower yen threshold for tickets is also in limbo. Komeito has argued for a 50,000 yen minimum, the same amount that triggers disclosure of donations to a political organization. The LDP has insisted on a threshold of 100,000 yen out of a concern that disclosure of the identities of purchasers will affect their businesses and in turn discourage ticket purchases.

“Policy activity fund” is another point left unresolved. Each party receives an appropriation from the government that the party places in its policy activity fund.    Each party then allocates funds to individual lawmakers. Lawmakers are supposed to spend the funds on election campaigns, but, by virtue of an exception in the Political Funds Control Act, a party is not required to report how the transferred funds are spent.  Both parties agreed that the expenditures should be made public.

The manner of disclosure, however, remains in dispute. Komeito has proposed that each party submit a list of specific expenditures and their purpose. The LDP will agree only to the disclosure of categories of expenditures and not specific amounts or their purpose. The LDP argues that its approach protects “freedom of political activity.”  But the fund is a government appropriation – that is, it is funded by taxpayers. A party can hardly be responsible to the taxpayers unless it makes details of the fund public.

There have been reports that some LDP leaders have transferred funds to an “unregistered political organization,” which is mostly free from disclosure regulations.  In response, the LDP-Komeito agreement includes a new rule for the disclosure of transfers annually of ¥10 million or more to these unregistered organizations.

The agreement does not address political donations by companies and organizations. Although Komeito is willing to discuss this issue, the LDP firmly opposes any reforms that would change current arrangements. The opposition parties, including the Japan Innovation Party (Nippon Ishin-no-kai), call for a complete prohibition on these donations.

The Constitutional Democratic Party (CDP) demands a ban on any fundraising parties and the termination of the policy activity fund. To these ends, the CDP, together with the Democratic Party for the People, is preparing a bill to amend the Political Funds Control Act. As debate in both Houses continues, the unwillingness of the LDP-Komeito coalition to engage in political reform is becoming obvious.

The failure of the LDP and Komeito to reach agreement on a full range of political reforms can only be attributed to Kishida’s lack of leadership.

Kishida needed an agreement with Komeito on thorough political reform, especially after the bitter defeat in three by-elections in April. After returning from trips to France and South America, Kishida urged LDP leaders to accelerate the discussion with Komeito. However, the negotiations resulted in consensus only on modest reforms. Afraid that negative public reaction will imperil their chances in the coming election, some LDP lawmakers criticized the agreement for failing to demonstrate a commitment to political reform.

For his part, Kishida expressed satisfaction. “The parties wrapped up the measures for not repeating the same scandal,” Kishida told reporters. This response made him look like he is driving a car on automatic cruise control.

Moreover, his credibility is in doubt. A monthly magazine, Bungei Shunju, included an interview with a former head of the Abe faction, Yoshiro Mori. In Diet debates earlier this year, Kishida said he had asked Mori about the kickback system in the Abe faction. In his interview, Mori said that Kishida had never asked him that question. Kishida insisted that he could not confirm Mori’s involvement in the scandal.

Kishida’s inability to explain the entire scandal is at the core of the public’s frustration. In the first trial of the lawmakers and accounting managers of the LDP for failure to report surplus payments, Jun-ichiro Matsumoto, the former accounting manager of the Abe faction, did not say how or why the LDP’s leaders continued to discuss the kickback system. It is thus not the court, but political leaders who are responsible for investigating how the secret fund was controlled.