A Liberal Democratic Party chapter led by economic revitalization minister Toshimitsu Motegi received a donation in 2015 from a company subsidized by the state, Kyodo News learned Thursday.
Motegi, who assumed his post in a Cabinet reshuffle earlier this month, and architectural company Nikken Sekkei Ltd. have denied any wrongdoing, saying the donation fell under an exception granted by the Political Funds Control Law that bans companies from making political donations within a year of receiving state subsidies.
The exception is applied when subsidies do not help to raise profits at recipient companies.
The industry ministry decided on Feb. 6, 2015, to pay ¥10 million ($91,400) in subsidies to Nikken Sekkei to find new sales outlets in emerging economies.
A week after the decision, the Tokyo-based company donated ¥180,000 to the LDP branch in Motegi’s electoral district in Tochigi Prefecture, according to the branch’s political funds report.
“It was deemed an exception,” an official of Nikken Sekkei said. Motegi’s office, meanwhile, said, “We did not know at the time that the company was receiving the subsidies, but we do not think they were the kind (of subsidies) that would restrict donations.”
Nikken Sekkei was expected to face losses in the subsidized project and therefore the donation was covered by the exception clause, the office added.
Motegi was head of the LDP’s Election Strategy Committee at the time and previously served as economy, trade and industry minister.
Hiroshi Kamiwaki, a professor at Kobe Gakuin University who focuses on political funds issues, criticized the donation, saying it “should not have been received” because it was almost the same as taxpayer money flowing to a party branch.
“We need a legal revision to remove the exception clause,” Kamiwaki said, while noting that in the meantime the LDP branch that received such a “problematic” donation should not be represented by a serving minister.
Nikken Sekkei also donated a total of ¥540,000 to the same LDP branch in 2013 and 2014. The company’s subsidiary, Nikken Sekkei Research Institute, was found to have donated ¥180,000 in 2014 and again in 2015.
The Political Funds Control Law restricts donations from subsidized companies and other entities to prevent corruption and ensure fairness in political activities, but the rules may lack teeth because of the exception clause.
Similar cases have occurred in the past, including donations to LDP branches headed by Prime Minister Shinzo Abe and former farm minister Koya Nishikawa.
Abe said he did not know that the company involved was subsidized when he faced questions over the donations in 2015. Nishikawa denied any illegality but stepped down from his ministerial post the same year.