Political funds control loophole

The money scandal that led to the resignation of Akira Amari as economy minister makes yet another case for an overhaul of the system regulating political donations, which has a history of being amended in response to recurring money problems involving senior lawmakers and businesses but left with loopholes.

Amari, a close political ally of Prime Minister Shinzo Abe, quit his Cabinet position last week after admitting that he and his secretaries received millions of yen in cash and benefits in 2013 and 2014 from a construction firm that allegedly asked his office to intervene in talks it was having with a government-funded housing corporation for compensation related to a road construction project in Chiba Prefecture. While acknowledging receipt of the money, part of which was “privately” used by one of his aides, Amari denied his office used its influence to turn the negotiations in the company’s favor, and the Urban Renaissance Agency (UR) — whose officials met with Amari’s aides a dozen times — says its decision to award the company more than ¥200 million in damages was not the result of meddling by the veteran lawmaker’s office.

It has yet to be established whether any law has been broken, including the anti-graft law, which prohibits lawmakers and their aides from receiving financial benefits for using their power to influence contracts and administrative decisions involving national and local governments. The UR released what it says are partial records of the conversation between its officials and Amari’s secretaries, which do not show that the aides made outright demands or put pressure on the officials to influence the talks with the construction firm. It’s not clear whether mere contact from the office of a powerful ruling party lawmaker asking for “explanations” on a dispute involving government institutions in itself served as sufficient pressure. What seems clear is that business donations to individual politicians — which was supposed to have been banned in the amendments to the Political Funds Control Law in the 1990s — effectively remain business as usual today.

Amari admitted he received a total of ¥1 million from the construction firm on two occasions, including once at his Cabinet office in an envelope containing cash that was stashed in a bag of confectionery. He said he interpreted the money as a gift celebrating his appointment to the Cabinet and recovery from an illness, and that he ordered his staff to adequately process the money as a political donation.

The amended political funds law prohibits donations from businesses and organizations to individual politicians. The 1994 revision came on the heels of bribery and other money scandals involving senior Liberal Democratic Party lawmakers. The ban was intended to stop the collusion between politicians and businesses. As a measure to cover the cost of political activities in more transparent ways, the system of providing subsidies from state coffers to political parties was introduced in 1995. More than ¥30 billion out of taxpayer money is distributed each year to political parties.

But while political donations by businesses are supposed to have been restricted to political parties in the amended law, donations made to a local party chapter — typically headed by the lawmaker elected from that constituency — effectively end up in the hands of the lawmaker. The ¥1 million delivered to Amari in person — which, according his explanation, seems obviously directed to the lawmaker himself — was processed as a donation to the LDP’s No. 13 chapter in Kanagawa Prefecture represented by Amari.

In the news conference announcing his resignation, Amari said lawmakers lose in elections if they deal only with “good people,” because in a single-seat electoral district “you cannot win the race unless you embrace anybody who comes your way.” His candid remark was apparently referring to the need to get support from a broad spectrum of people to win the tough winner-take-all competition in such constituencies — and perhaps alluding to the difficulty of rejecting donations from “bad” people who might be seeking favors in return for their money.

It is ironic that the current single-seat district system in Lower House elections was introduced in 1995 as part of the political reforms in response to the repeated money scandals of lawmakers, along with the amendments to the political funds law. The previous multi-seat system, in which several lawmakers were elected from the same district, was billed as a key factor behind money politics because it forced LDP members to engage in fierce competition with each other within such districts.

The single-seat constituency system concentrated the LDP’s power in the hands of the party leadership — which also controlled the money from government subsidies — and weakened the influence of the factional groups that used to sway the power games within the party and were also blamed for the problem of money in politics. But it seems only an illusion that political donations will be “clean” if they’re made to political parties, instead of individual politicians, since the system’s loopholes make the distinction meaningless.