Talks may focus on but won't solve fundraising scandals

A spate of recent fundraising scandals involving Liberal Democratic Party lawmakers has sent shock waves through the Diet, prompting the LDP-controlled Lower House Budget Committee to schedule a special session Thursday to discuss money in politics.

During the session, a number of scandals, such as illegal donations and kickbacks involving public works, are expected to be discussed. However, critics are still not convinced that simply holding special Diet sessions will lead to revisions of the rules regarding corporate donations that will help prevent scandals.

Opposition parties have been advocating reform and even proposed a bill last May to ban all donations from firms that receive public works orders, a practice considered conducive to illicit ties between politicians and construction firms. Yet lawmakers in the ruling camp appear to be reluctant to implement reforms.

Prime Minister Junichiro Koizumi, president of the LDP, is no exception.

“No matter how many laws you draw up, (politicians) will violate them,” Koizumi told a recent Diet session, immediately drawing flak from the opposition camp. “There’s nothing you can do.”

The recent scandals include the arrest last month of two former executives of the LDP’s Nagasaki prefectural chapter for violations of the Public Offices Election Law. They had allegedly demanded political contributions from about 30 local contractors for the Nagasaki gubernatorial election last February.

The law prohibits politicians from seeking donations for a specific election from a company receiving public works orders. However, as it is difficult to distinguish funds used for election campaigns from those used for general party activities, it is rare for police to file such charges.

The Nagasaki case shocked many LDP lawmakers because seeking political donations ahead of an election is a common practice among them.

Investigative authorities have been in denial about this type of fundraising, which has become an everyday occurrence, said Tomoaki Iwai, a professor at Nihon University and an expert on money in politics. “The impact is great and it’ll now be difficult for political parties to raise such corporate donations.”

Indeed, some representatives from local LDP chapters expressed concern at a meeting at the party’s headquarters on Jan. 15, asking party executives to draft a guideline on what donations are illegal.

In another recent scandal, major construction firm Kumagai Gumi Co. was found to have acted illegally by donating about 100 million yen to the People’s Political Association, the LDP’s fund-management body, between 1996 and 2000 despite the company’s feeble financial state.

In response to a lawsuit filed by a shareholder, the Fukui District Court ordered a former president of Kumagai Gumi to pay 28 million yen in damages for endorsing the firm’s political donations to the LDP between 1998 and 2000, a period during which the firm was bleeding yen.

The law bans firms from making such contributions if they are operating in the red for three consecutive years.

Observers expect that the ruling in the Kumagai Gumi case will discourage construction firms — of which many are currently operating in the red — from making similar donations.

During the Feb. 20 special session, the alleged payment of kickbacks to a political aide to farm minister Tadamori Oshima is also expected to be addressed. The aide is accused of receiving 60 million yen in return for helping contractors secure public works projects.

Despite the snowballing scandals, the ruling camp has been slow to respond. In July, an expert advisory panel to the LDP submitted a report recommending that a limit be placed on donations from companies that have received public works orders.

The report was shelved.

Nihon University’s Iwai stressed that this special session should not be a forum to grill or bash certain LDP politicians but should be an opportunity to focus on fundamental reforms to enhance transparency in political fundraising.

As an example, Iwai said the function of local political party chapters could be targeted for reform. By primarily serving as fundraising bodies for lawmakers, they constitute a major loophole in the Public Offices Election Law.

Under the law, each lawmaker is limited to having only one official fund-management body, to which corporate donations are completely banned.

Yet there is no limit on the amount of corporate donations to parties’ local chapters, and there are no restrictions on the flow of funds from those chapters to lawmakers’ fund-management bodies.

Furthermore, the number of such local chapters have mushroomed over the years as political parties can establish as many as they want. As of December 2001, the LDP had 7,123 local chapters.