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Fundraising loopholes, a political norm

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The Liberal Democratic Party lost a large number of seats to Tokyo Gov. Yuriko Koike’s upstart Tomin First Party in the Tokyo assembly election. Media surveys reveal that the public is dismayed by recent scandals involving the LDP, in particular the one surrounding educational company Kake Gakuen, which may have received special attention from LDP bigwigs in approving the company’s new veterinary department. Prime Minister Shinzo Abe is reportedly a close friend of Kake’s chairman.

Abe and the LDP continue to deny the allegations, and by doing so they can pin the poor election showing on the media, which is pursuing them. The LDP could make the case that the loss was caused by a malevolent, conniving press and thus disregard the accepted truth that the citizens of Tokyo, for better or worse, are impressed with Koike’s performance so far as governor. They supported the people she supports, some of whom bolted the LDP for Tomin First to take advantage of her popularity.

Hakubun Shimomura, deputy secretary general of the LDP and the head of its Tokyo chapter, characterized the anti-media version of events even before the election was held. In its July 6 issue, the weekly Shukan Bunshun reported that while he was education minister, Shimomura received ¥2 million in political donations from Kake Gakuen that were not properly reported. Shukan Bunshun produced digital copies of internal documents to prove it.

At a news conference on June 29, Shimomura refuted the article, which was published on the same day. The money, he said, was donated by 11 individuals, and since each donation was less than ¥200,000 his office wasn’t required by law to report the donors’ names. Though Kake Gakuen appeared on the internal list of donors produced by Shukan Bunshun, Shimomura insisted that it was there only because a Kake employee had collected the money from the 11 unidentified people.

The explanation sounded plausible on the surface, but anyone with knowledge of how political fundraising works would have been immediately skeptical. No one can make political contributions directly to politicians. They can only donate money to representative organizations or the political party to which the politician belongs. Also, political parties and groups cannot receive money from companies that have contracts with or receive subsidies from the government. Legally, Kake Gakuen cannot make political donations because, as a private educational organization, it has been the beneficiary of government largesse.

Entities that want to grease the palms of relevant politicians have to find ways around these laws, and there are plenty of them. If Kake Gakuen wants to contribute money to Shimomura’s group, Hakuyukai, all it has to do is distribute money to enough individuals who, in turn, donate the money while remaining anonymous. Of course, Hakuyukai knows where the money is really coming from, as implied by the internal document leaked to Shukan Bunshun, but no one else has to know since they aren’t required to report it. If the list is genuine, a political funds expert told Shukan Bunshun, then it’s a violation of the law.

It’s doubtful that anything will come of it. The political fundraising structure is riddled with loopholes that have been obvious for years. The ¥2 million at issue was raised through fundraising reception parties. Political groups throw parties at swanky hotels and donors buy tickets, usually for ¥20,000 to ¥30,000 a pop. Often they buy blocks of tickets and don’t even show up, because actual wining and dining isn’t the point. All they want to do is spread their money among lots of individuals, usually employees, without getting their name exposed publicly.

Shukan Bunshun found other problematic organizations on the internal list of donors, like the nationwide prep school Toshin High School (¥500,000 worth of tickets for a Sept. 25 affair). There was no mention of Toshin in the reports filed with election authorities. Shukan Bunshun estimates that, over a three-year period, Hakuyukai received about ¥10 million in suspicious donations through party fundraisers.

Businesses aren’t the only beneficiaries of the fundraising party loophole. Politicians also attend wingdings thrown by other politicians and donate money to them. This situation was explored last fall when three LDP executives — Chief Cabinet Secretary Yoshihide Suga, Defense Minister Tomomi Inada and Internal Affairs and Communications Minister Sanae Takaichi — were grilled by the Japan Communist Party’s Akira Koike over receipts they had been given for purchasing party tickets. Apparently, the receipts were distributed “white,” meaning without payment amounts written down. The trio’s excuse was that it was too much trouble for the staff to provide yen amounts so they just give blank receipts for their offices to fill in later. Koike asked how they could call it a receipt if payers could write down any amount they wanted? It’s a matter of trust, they replied.

Blank receipts can be used for padding expenses, and politicians receive funds from the government for political activities, so it’s another way to raise money, but this time the taxpayer is the donor, albeit an unwitting one.

These practices are hardly exclusive to the LDP. All political parties except the JCP, which doesn’t accept government funding, do it and the media knows it. But no matter how often they expose the loopholes, nothing happens because politicians simply deny wrongdoing. The only ones who are prosecuted, such as former LDP honcho Ichiro Ozawa, are people who tend to bother the government.

Ultimately, Shimomura partially blames fake news for the LDP’s loss in the Tokyo election. Interestingly, a former aide, Keisho Taira, who was fired from Shimomura’s organization for embezzlement and is believed to be the source of the documents leaked to Shukan Bunshun, went over to Tomin First and won a seat in Shimomura’s constituency. Now he’ll be throwing his own parties, as will Koike, who was once a pillar of the LDP and may, in fact, return to their not-so-loving arms.

Nothing has changed, and it’s seems likely nothing ever will.