LDP calls Hatoyama to account

But going after DPJ chief's shady cash stash, or mommy's 'loans,' could backfire

by Jun Hongo and Alex Martin

Revelations that Prime Minister Yukio Hatoyama received ¥900 million from his mother — allegedly as a loan — has put the Democratic Party of Japan on the defensive, as opposition parties, the ex-long-ruling Liberal Democratic Party in particular, seek to grill the fledgling administration over the dubious funding.

Although many criticize Hatoyama as the heir of a political dynasty who lacks common sense, they also acknowledge he is likely to emerge from the scandal relatively unscathed.

“There was some deliberate misconduct” on Hatoyama’s part that should not be overlooked, Nihon University professor Tomoaki Iwai said. “But this issue is unlikely to lead to the downfall of the administration or Hatoyama’s resignation.” There is no indication, the political funds expert pointed out, that Hatoyama accepted the shady donation for personal gain.

Hatoyama’s shenanigans came to light June 30 when he acknowledged that his aide had faked donation sources — in some cases using the names of the deceased — and reported an income of ¥21.77 million to his political fund management body, Yuai Seikei Konwakai.

Although Hatoyama later corrected his fund report, the revelation that the money came from his own pocket added a new dimension to the case.

Earlier this month, Hatoyama acknowledged that he may have bankrolled Yuai Seikei Konwakai beyond the limits of the Political Funds Control Law, which bans politicians from contributing more than ¥10 million a year.

The excess money should be considered a loan, he explained, while conceding that his former aide withdrew about ¥50 million a year over the past six years from his personal fund.

But the scandal spread when it was reported this week that Hatoyama’s mother, Yasuko, 87, the oldest daughter of Bridgestone Tire Co. founder Shojiro Ishibashi, tipped in as much as ¥900 million between 2004 and 2008 to Yuai Seikei Konwakai.

Meijo University professor Nobuo Gohara said Wednesday that Hatoyama’s mother’s involvement adds taxation issues to the scandal.

If the mother gave the money to her son, the prime minister is on the hook for a gift tax. If the ¥900 million constituted donations to Yuai Seikei Konwakai, it would violate the Political Funds Control Law, which limits individual donations to a politician to ¥1.5 million per year.

“If this money is to be defined as a loan, then there is no problem,” Gohara told reporters. But Hatoyama himself continues to claim he was not aware of his mother’s involvement, which undercuts the assertion that the money is a loan. Finding a bond of debt for the ¥900 million will also be crucial to proving the case.

In the face of such allegations — including undeclared income from stock sales that came to light earlier this month — Hatoyama remains mum.

The prime minister acknowledged to reporters earlier this month that he “was raised in a wealthy family” and was “extremely careless” in managing his own finances, but has not commented further, citing the ongoing investigation by prosecutors.

Experts say investigators will focus on the extremely large amounts of money involved to evaluate whether they have a case. But they add that authorities will probably be unable portray the scandal as a bribery case that could put lawmakers behind bars or cost them their jobs.

Nihon University’s Iwai contrasts the scandal with the one that forced DPJ Secretary General Ichiro Ozawa to step down as party president earlier this year.

Ozawa’s top secretary, Takanori Okubo, was charged with violating the Political Funds Control Law for allegedly accepting illicit donations from Nishimatsu Construction Co., but Iwai said the chances are slim that Hatoyama will meet the same fate.

“In Ozawa’s case, it’s possible the donation are connected to other mischief, including orders for dam construction projects,” the expert said. Because the shady donation to Hatoyama did not come from the private sector, the indictment of the prime minister’s aide will likely put an end to the scandal, he reckoned.

The LDP-led opposition’s best shot is to make the case that Hatoyama is playing by a double standard.

The DPJ gained public support by pledging to “clean up” politics, a stance Hatoyama used to sweep his party to power in the Aug. 30 election that ended the LDP’s long rule. In 2002, when LDP heavyweight Koichi Kato’s aide was arrested over a tax scandal, Hatoyama urged Kato to take responsibility for the misconduct.

“If my secretary were involved in a similar situation, I would apologize. And not only would I leave my party, I would resign as a lawmaker. I believe that is the standard way of thinking,” he told a crowd in a 2002 speech.

But with bribery and corruption scandals in the LDP’s own history, analysts question whether the party can convincingly hold a moral high ground on the issue.

Experts point to the secret donation from the Japan Dental Association to the LDP’s then top faction in 2001. The coverup of a ¥100 million payment resulted in a suspended prison term for one-time LDP heavyweight Kanezo Muraoka, as well as a former treasurer of the faction. Muraoka’s verdict was upheld and finalized by the Supreme Court last year.

The list of LDP misdeeds is long, including the largest postwar bribery case, involving the late Prime Minister Kakuei Tanaka, who received ¥500 million from Lockheed Corp.

The 1992 arrest of then LDP Vice President Shin Kanemaru for receiving ¥500 million from Sagawa Express Co. also made headlines. Also, Noboru Takeshita was forced to step down as prime minister in 1989 after the notorious Recruit Co. bribery case.

Analyst Gohara said the public is not as worked up about Hatoyama’s case because the misconduct does not involve third parties. Setting aside the faked contributions, Hatoyama’s scandal is seen as a “family matter” that involves personal funds.

“Finding the right approach is difficult for the LDP, which doesn’t want any criticism to backfire,” Nihon University’s Iwai added, suggesting that perhaps it would be better for the opposition to hold its fire until campaigning for July’s Upper House election kicks off. “On the other hand, Hatoyama should be OK just sticking to apologizing,” he said.