The Japan Business Federation (Nippon Keidanren) hopes to restore its political influence by encouraging member firms to pay donations to parties and by evaluating how the parties measure up.
Top figures in the nation’s key business lobby — including Chairman Hiroshi Okuda, Nobuyuki Idei, chairman of Sony Corp., and Fujio Mitarai, president of Canon Inc. — will hold intensive discussions on the plan at the group’s annual summer forum, which will be held Thursday and Friday in Shizuoka Prefecture.
The group will invite Prime Minister Junichiro Koizumi to a reception on the second day, to reflect its hope of bridging the divide between the business community and the political arena, particularly over economic policy.
“It will be a good occasion for Prime Minister Koizumi to better understand how executives at Japan’s major companies see the current economy,” said a senior Nippon Keidanren official who declined to be named.
In May, the group announced plans to restart promoting political donations next year, following a decade-long freeze that was initiated amid widespread corruption scandals involving the ruling party.
Nippon Keidanren’s predecessor, the Japan Federation of Economic Organizations (Keidanren), which later merged with the Japan Federation of Employers’ Association (Nikkeiren) to form the current body, used to collect donations from member firms and channeled more than 10 billion yen each year to the ruling Liberal Democratic Party.
Keidanren launched the donations in the late 1950s, arguing that they were needed to protect the nation’s “free economy” during the Cold War. The lobby built up a huge influence over politics.
But Keidanren stopped soliciting donations in 1994, a year after the LDP lost control of the government for the first time in 38 years. It was a time when corruption scandals involving lawmakers and general contractors focused public criticism on corporate contributions.
As a result, total donations to the LDP made voluntarily by member companies decreased to 3.1 billion yen in 2001, according to Nippon Keidanren.
According to the Public Management, Home Affairs, Posts and Telecommunications Ministry, overall declared corporate donations to all political groups came to 20.8 billion yen in 2001, down 39 percent from 1997. Meanwhile, individual donations accounted for 44.9 billion yen, up 17 percent.
This suggests corporate influence over politics has waned.
When Okuda said in January that the consumption tax should be raised to 16 percent from 5 percent by 2014, Koizumi, the LDP president, quickly declared there would be no increase while he is in office.
Moreover, when Nippon Keidanren and two other business organizations jointly urged the government in April to revise the securities tax system to revitalize the nation’s stock markets, the government gave them the cold shoulder.
“Business leaders feel a sense of crisis that Japan’s economy may fall to second- or third-class status unless the legal and tax systems are overhauled,” said Norio Nakamura, director of Nippon Keidanren’s social affairs bureau.
To get politicians to listen, Nippon Keidanren will adopt a new approach toward promoting donations from member companies, he said.
The business lobby will first set a priority agenda that it wants politicians to pursue. It will then draw up detailed checklists to evaluate the pledges parties make to achieve these goals.
“In the past, Keidanren raised the funds demanded by the LDP by making member companies donate specific amounts,” Nakamura said. “But the new scheme is more transparent, as member firms will be able to base their decision on whether to give funds to a given political party on the evaluation.”
An in-house committee of about 30 member company executives has already been set up to discuss how to measure the various parties’ policy goals, with an eye to recommending whether a certain party merits donations even if it is not holding the reins of power.
Major points to be checked include policies on financial reconstruction, social security, fiscal and tax system reforms, deregulation and the use of human resources.
Detailed checklists will also be drawn up on specific measures, probably including a consumption tax increase.
The new donation strategy, however, will probably not be introduced until after the next House of Representatives election, which is widely expected to take place in the fall.
“We didn’t expect the election to be held this early,” a Nippon Keidanren official said. “So it will be difficult to complete the necessary procedures beforehand.”
Critics say, however, that the group needs to win public support before resuming its activity to encourage political donations, as there has been no end to corruption scandals involving politicians and companies.
Kakutaro Kitashiro, chairman of the Japan Association of Corporate Executives (Keizai Doyukai), told a news conference last month that the public should decide how much is spent on political parties’ activities and who can provide the funds.
“I think political funds should be covered by the (parties’) member fees, donations from individuals and public subsidies,” he said.
Haruhito Takeda, an economics professor at the University of Tokyo, said Nippon Keidanren should increase its influence over voters instead of funding parties if it wants to sway the government.
If Nippon Keidanren provides a fair and useful evaluation of the parties, this could have a major impact on voting attitudes, Takeda said.
“Using money (to influence political policies) is not the democratic way,” he said. “I don’t understand why the group plans to link its evaluations with political donations. . . . It shows the business circle’s distrust of the government as well as its weakening power over politics.”
Nippon Keidanren plans to draw up the checklists and party ratings by the end of this year. The results will be disclosed early next year.
“The effectiveness of this new mechanism will depend on whether we can evaluate political parties properly,” Nakamura said.
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