Prosecutors are unlikely to establish a tax-evasion case against Koichi Kato, a former Liberal Democratic Party power broker, because they don’t believe he had any malicious intent, sources close to the case said Thursday.
Kato, a former LDP secretary general, has told tax authorities he will revise his income statements to say he used nearly 100 million yen he received from his political-fund management body for personal purposes — not as tax-free political funds, the sources said.
He received the funds over four years through 2001.
Kato, 62, used the money to pay around 1.1 million yen in monthly rent for a condominium in Minato Ward, Tokyo, send money to his mother in his home town in Yamagata Prefecture, and settle credit-card payments, they said.
Kato earlier explained he believed it was appropriate to spend his political funds to cover the rent for the condo, in the upmarket Minami-Aoyama district, because he used it as an office as well as a residence.
It is believed Kato will have to pay between 60 million yen to 70 million yen in taxes when revising the income statements. The fund-management body was handled by Saburo Sato, 61, who was Kato’s top aide.
Sato was indicted March 29 on charges of dodging 98 million yen in tax payments by concealing 265 million yen in income from contributions, kickbacks and rewards from construction and confectionery companies.
Kato, a former diplomat well versed in China-related issues, was widely seen as a possible future prime minister but resigned from the House of Representatives in April following the scandals involving his aide.
Upon hearing that the Tokyo Public Prosecutor’s Office is unlikely to establish the tax-evasion case against Kato, supporters in his constituency in Yamagata Prefecture showed mixed reactions.
Some supporters in the Lower House Yamagata No. 4 district expressed hope that Kato could make a fresh start as a politician.
One Yamagata Prefectural Assemblyman, and a longtime Kato supporter, said, “I do not think he will become a prime ministerial candidate again. But still, he can work for the country through the use of his expertise in diplomacy.”
Others, however, said they want to first listen to his explanation about the scandal.
“Mr. Kato has not returned to Yamagata since he left the LDP in March,” said one of his supporters in his home city of Tsuruoka. “He should first explain to us what the scandal was.”
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