On Nov. 7, an annual ritual of government occurred: The Board of Audit delivered its report on the results of its audit of government accounts for the previous fiscal year (April 1, 2015, to March 31, 2016) to the Cabinet. The 1,123-page paper brick handed over to His Abe-ness identified billions of yen’s worth of improper expenditures or accounting and trillions of yen’s worth of things that could be done more efficiently. On Nov. 18 the Cabinet submitted the report to the Diet, and perhaps sometime next summer the legislature will debate what it all means.

The misuse or waste of funds identified by the BOA in specific contexts provides a steady source of news stories (“Billions of yen wasted in Fukushima No. 1 cleanup” is an example from a March 24, 2015, JT headline), yet there is a greater whole that often gets missed.

The Board of Audit and the process of managing national finances takes place within a sphere of constitutional law that some scholars might call “The Boring Parts.” Nattering on about freedom of speech is all good fun — sexy even — but at the end of the day somebody has to keep the street corners where social activists do their hectoring paved and lighted. Depressingly, it seems that constitutional laws — just like just about every other type of law — are frequently about money.

If that sounds cynical, remember it was taxes, not free speech, that sent the founders of America over the edge, and they were informed by a system of parliamentary democracy that came courtesy of centuries of war. Not war for democracy, of course, but paying for less noble wars is the font of representative government. When the kings and queens of England needed money to pay for continental military adventures, they had to go through the tedious process of summoning the lords of the realm and elected representatives of less important taxpayers to form a parliament, and then ask them to stump up more than they were already paying.

Such occasions not only offered a rare opportunity to complain about the monarch being an authoritarian despot whose minions were doing a dismal job of governing, but also to impose new and often permanent limits on the royal prerogatives as a condition for temporarily paying more taxes. Gradually over time the monarchs became powerless and parliament became supreme. Today, thanks to the permanent revenue stream afforded to the modern state by income tax and other levies, a state of constant war and military interventions on other continents seems much easier to maintain without these sorts of bothersome confrontations.

Anyway, it was against this background that Japan’s first modern constitution — the Meiji Constitution of 1889 — was designed, its aim being to prevent the parliamentary “power of the purse” being used to frustrate autocratic governance. The Constitution called for expenditures to be approved by the Imperial Diet through the annual budgeting process, but if for whatever reason such approval was not forthcoming, the prior year’s budget could just be used again. However, Japan was busy building a modern army, navy, infrastructure, industrial base and a colonial empire to boot, meaning last year’s budget was never enough. The Diet thus became a powerful political force anyway, and democracy proved as annoying to the military as you might expect, with ultimately disastrous results.

The Meiji Constitution also required the final account of each year’s national revenues and expenditures to be “verified and confirmed” by the BOA, a government body established in 1880. Independent of the Cabinet and reporting directly to the Emperor, the BOA is said to have been one of the few prewar government institutions that could criticize the military — for poor bookkeeping, at least. Unfortunately, since defining the BOA’s audit powers was deferred to legislation, the military was able to pass laws to shield its expenditures from scrutiny on national security grounds.

The all-important ‘all’

Article 90 of the present constitution is quite similar to the corresponding provisions of its Meiji forbearer, with an important difference, one that is not even apparent in the English version, the relevant portion of which reads: “Final accounts of the expenditures and revenues of the State shall be audited annually by a Board of Audit and submitted by the Cabinet to the Diet, together with the statement of audit, during the fiscal year immediately following the period covered.”

What is missing from the English is an important subete (“all”) that makes it clear that all expenditures and revenues of the state are subject to audit. This means that whether public funds are spent by the Diet, the judiciary or the various ministries, the BOA gets to double-check the lot, no matter how sensitive.

In this respect the BOA is an odd institution, constituting almost a fourth branch of government. Its three commissioners are appointed by the Cabinet for fixed terms with the consent of both Diet chambers, but it is otherwise independent of the legislative, judicial and executive branches.

The scope of the BOA’s audit powers are exceptionally broad. Not only does it conduct the constitutionally required annual review of all expenditures and revenues, but under the Board of Audit Act it can and does also review a wide range of other aspects of national finances, including the condition of state property, the financial performance of government corporations and the use of government subsidies by their recipients.

This last category can suck local governments and private companies into the review process. For example, the biggest inefficiency identified in the most recent report was at government-owned toll road corporations, which the BOA suggested could save trillions of yen by better policing corporate users who enjoy significant toll discounts while operating overloaded trucks that cause most of the wear and tear to the nation’s expressways.

Following the money

The Diet and Cabinet may also call on the BOA to investigate and report on specific areas of concern. This time the BOA looked into (among other things) the efforts of national universities to develop revenue streams; the financial conditions of JR Shikoku, Hokkaido and Kyushu; and the status of reconstruction efforts in northeastern Japan.

A more interesting example of this sort of review arose in connection with the 2010 decision by a prosecutorial review commission to start legal proceedings against former Democratic Party of Japan boss Ichiro Ozawa for comparatively trivial political finance reporting violations.

Review commissions are panels of randomly selected citizens that can be petitioned to review prosecutorial decisions not to bring a prosecution. Occasionally they disagree with prosecutors and can even initiate a prosecution through private attorneys; Ozawa’s case was a rare occasion when this happened, though not a surprising one, since prosecutors gave the commission a highly misleading account of an interrogation of an Ozawa aide suggesting his boss was guilty guilty guilty! Ozawa — a well-known critic of bureaucrats and foe of prosecutors — was ultimately acquitted at trial, though the whole sordid affair probably prevented him from becoming prime minister.

This high-profile case brought rare public attention to the commissions, which are overseen by the judiciary. The identities of those who serve on them are secret, but the court responsible for the commission that indicted Ozawa stonewalled when the media requested even basic demographic information such as the age and gender of the participants.

Clever journalists then tried to follow the money, filing information requests seeking details of travel expense reimbursements. Information provided by the courts revealed the same recurring amount was disbursed monthly to commission participants — suspicious since the random and changing composition of the individual commissions meant that these costs should be variable, not fixed.

So much secrecy shrouded the commission that indicted Ozawa that writers investigating it were unable to find anyone in an official capacity who would admit to even having direct contact with any of its members. A fun book published in 2012 advanced the conspiracy theory that the commission never actually existed. Rather, it claimed, prosecutors (with the collusion of the judiciary) had manufactured it in order to remove Ozawa from play without getting their hands dirty.

In 2012 this lack of transparency apparently inspired a Diet committee to ask the BOA to look into court finances, and the management of disbursements in connection with the prosecutorial review commissions in particular. In 2013 the BOA duly submitted its findings, concluding that the courts could indeed do a better job of managing their finances, such as by keeping basic records of commission meetings and expenses.

State secrets and the Constitution

Conspiracy theories are a lark, but let us return to the all-important “all” in Article 90 of the Constitution. The state secrets law rammed through the Diet by the Abe administration in 2013 empowers national government agencies to classify certain types of information, restrict access to it and severely punish its disclosure or dissemination. It does not contain clear exceptions for disclosure to the BOA in connection with audits. So much for “all.”

The BOA reportedly advised the Cabinet Secretariat to amend the legislation so that it was compliant with Article 90. The Cabinet declined, asserting that there was no constitutional issue with the law. A polite standoff developed between the two institutions, and people who cared about such things were quick to point out the parallels to the prewar system of immunizing military secrets from financial scrutiny.

A compromise was reached whereby the law would stay as it was but the Cabinet Secretariat would issue written instructions to all government departments saying that the law would have no effect on established practice when responding to information requests in connection with BOA audits. However, it took two full years for the Cabinet Secretariat to keep its end of the bargain, finally distributing the promised tsūtatsu circular on Christmas Day 2015.

Less than two months later, however, when questioned at a Diet budget committee meeting, a government representative espoused an official view that classified information would be provided to the BOA only if doing so did not threaten national security, suggesting that maybe “all” didn’t really mean “all” after all. This statement was of enough concern that the chairman of the National Federation of Bar Associations issued a statement of alarm at what appeared to be government efforts to subjugate the Constitution to the needs of national security. (There’s been a lot of that going around.)

It’s fun to imagine the be-suited auditors at the BOA turning out to be the true guardians of the Constitution. Unfortunately, though, some commentators have suggested that the BOA’s ability to even hold ministries fiscally accountable has been compromised by the time-proven technique of amakudari — procuring tasty post-retirement jobs for BOA officials who play nice. And perhaps a constitution is the type of thing whose value people can only really appreciate after it has gone.

Colin P.A. Jones is a professor at Doshisha Law School in Kyoto. The views expressed are those of the author alone. Law of the Land appears in print on the second Monday Community Page of the month. Comments: community@japantimes.co.jp

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.