Some of the Foreign Ministry's discretionary diplomacy funds were given to the Cabinet Secretariat every year despite legal restrictions on the transfer of budget funds between government organs, some government officials said Wednesday.

There were usually items in the annual budgets that read "for the Cabinet Secretariat" and "supplementary funds for the Cabinet Secretariat," the officials of the Foreign and the Finance ministries said.

Their remarks counter those made by Prime Minister Yoshiro Mori and Foreign Minister Yohei Kono, who have maintained that there has been strict budgetary separation between the ministry and the Cabinet Secretariat.

In fiscal 1999, about 5.6 billion yen was allotted to the Foreign Ministry as discretionary funds, whereas about 1.5 billion yen was given to the Cabinet Secretariat.

The officials said that between 30 percent and 40 percent of the discretionary money was given to the Cabinet Secretariat every year.

"It was something many government officials knew," one of the officials said.

The alleged practice of shifting funds from one government organ to another is believed to constitute a violation of the law regulating the national budget, said Hirohisa Kitano, professor of law at Nihon University.

The funds -- officially called "compensation expenses" -- are intended to cover costs for classified government activities such as intelligence gathering and are allocated to a number of bodies.

However, the Foreign Ministry and the Cabinet Secretariat obtained far larger shares of the discretionary funds than other organs, such as the Defense Agency.

The alleged transfer of funds appears to have been aided by the lack of transparency over the use of discretionary funds. The Board of Audit does not normally ask for receipts although expenses are subject to procedural examination, and details of expenses are not disclosed.

Observers point out that the loose fiscal relationship between the Cabinet Secretariat and the Foreign Ministry likely served as an impetus behind the embezzlement scandal in which Katsutoshi Matsuo is embroiled suspected of using discretionary funds he handled for personal purposes.