The Foreign Ministry, in the wake of an embezzlement scandal involving a senior bureaucrat, will cut its discretionary diplomatic funds, step up its inspections and let the foreign minister have the final say on spending, it announced Wednesday.

The ministry, in a reform report approved Wednesday by the Liberal Democratic Party’s panel on foreign affairs, said it will strive to effectively use the discretionary diplomatic funds for the current fiscal year, for which 5.57 billion yen is already allocated.

Starting the next fiscal year, the ministry will work to reduce the discretionary fund by moving nonclandestine expenses out of the fund to other budget items eligible for disclosure, it said.

The final report does not set a specific fund-reduction goal, although various percentages, including 15 percent and 20 percent, were floated while the report was being drafted.

The report was originally drawn up by the bureaucrats, but five political appointees — two senior vice ministers and three parliamentary secretaries — took the lead in making the final report, and Foreign Minister Makiko Tanaka and Prime Minister Junichiro Koizumi endorsed it.

Senior Vice Foreign Minister Seiken Sugiura told a news conference that he and other political appointees decided not to spell out a reduction number because “it is unpredictable how much money the ministry can actually save” at the end of the year.

Tanaka also agreed not to include a numerical reduction target, Sugiura said, adding that the report was released after the original end of May deadline because the ministry needed to coordinate with the ruling parties.

Sugiura stressed that the responsibility for the discretionary fund will fall on the foreign minister — instead of bureaucrats — who will check the purposes and allocation of the money and give final approval. The report follows recommendations submitted by a panel of experts in April.

However, the latest report represents Tanaka’s desire to take the lead in reforming the ministry, including having the final say on spending, Sugiura said.

Also at the request of politicians, the ministry will invite outside experts, including certified accountants, to inspect the ministry’s accounting and other activities at its headquarters, in addition to inspections carried out by senior ministry officials at overseas establishments.

The inspections will be done without prior notice, according to the report, which was compiled in response to public criticism over the shady use of public funds by ministry officials following revelations in January that Katsutoshi Matsuo, former head between 1993 and 1999 of a ministry division supporting VIP’s overseas visits, allegedly embezzled millions of yen from the discretionary fund.

Matsuo has been charged with defrauding the government of over 470 million yen and diverting part of the discretionary funds from the Cabinet secretariat for private use.

No system was in place to check for misuse of the money, and Matsuo had sole responsibility for handling the discretionary funds.

The report says the ministry staff will not touch the discretionary funds at the Cabinet secretariat, while the budget for supporting prime ministers’ overseas visits will be allocated under the Foreign Ministry from fiscal 2002. Nonclandestine expenses, including outlays by the government’s overseas establishments for entertaining visiting Japanese politicians, will be disclosed, and the purpose of such expenses will also be reviewed, the report says.

As another cost-cutting step, the ministry will largely reduce the size of delegations for VIP’s overseas visits.

Noting that Matsuo’s long stint at the same post helped created an environment for embezzlement, the ministry said it will routinely conduct personnel transfers and limit the time of postings.

The ministry will also encourage the promotion of nonelite-track staff to senior positions and will also accept outside experts, including officials from other ministries, in ambassadorial and other senior posts.

To check the progress of reforms, the ministry will establish a panel of outside experts that will carry out hearings on ministry staff and take in public comments.

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