Finance Ministry to admit Moritomo documents were secretly altered

Kyodo, Bloomberg

The Finance Ministry has decided to admit that documents related to the shady 2016 land deal struck with Osaka-based school operator Moritomo Gakuen were secretly revised and that key parts were dropped from the version released to lawmakers last year, informed sources said Saturday.

The missing parts include an explanation of the history of the negotiations with Moritomo, which planned to open an elementary school on the plot in Toyonaka, Osaka Prefecture. In addition, phrases describing the “exceptional nature” of the heavily discounted land deal were deleted, the sources said.

The document-tampering was first reported by the Asahi Shimbun newspaper, causing a huge public stir. If the allegations are true, it would likely constitute a violation of the Penal Code that bans the fabrication of public documents.

The ministry plans to report the latest facts to the Diet on Monday, the sources said.

The sources said the ministry has not yet determined all the details about when or why the alterations were made and who was involved, and that the internal investigation will continue.

The admission is certain to deal a major blow to Prime Minister Shinzo Abe’s Cabinet, which is already reeling from Friday’s resignation of the chief of the National Tax Agency, who was under intense scrutiny over his involvement in the deal. It could also strengthen calls even within the ruling coalition for Abe and Aso to be held to account.

Before moving to head the tax agency in July, Nobuhisa Sagawa oversaw a division in the Finance Ministry involved in negotiating the land sale. Lawmakers and taxpayers had demanded the resignation of Sagawa, with Abe and Finance Minister Taro Aso forced to repeatedly defend his appointment in the Diet.

His resignation on Friday came on the same day that it was reported an official at the regional Finance Ministry bureau in charge of the sale had been found dead on Wednesday. The man left a note and police are investigating the matter as a suicide, Kyodo News said. Aso said he was aware of the situation, but his ministry declined to comment further.

Sagawa resigned to take responsibility for sowing “confusion,” Aso said at a news conference later on Friday.

The scandal has dogged Abe for more than a year, with questions being raised about whether his wife’s connection to the school meant its operator was able to buy government land cheaply.

It came to the fore again after the daily Asahi Shimbun reported a week ago that Finance Ministry documents relating to the sale had been altered before being submitted to lawmakers for inspection.

If the documents are found to have been tampered with, Abe and his Cabinet will face questions about who ordered the cover-up.

The controversy is the latest setback for Abe, whose administration was forced to ditch plans for reforming the labor market after the discovery of hundreds of errors in data provided to support the legislation.

Aso said he had instructed the ministry to investigate the facts surrounding the documents and that the results should be known as soon as the coming week.

Tobias Harris, a Japan analyst at Teneo Intelligence, wrote in an emailed note that the scandal could complicate Abe’s bid to win a third term as leader of the Liberal Democratic Party this autumn. The party’s majority in the Lower House makes it certain that its leader will be prime minister.

“For now, Abe is still likely to win: no rival within the LDP has been able to draw away his support from both the party’s rank-and-file supporters and parliamentarians,” Harris wrote before Kyodo News reported Sunday that the Finance Ministry was preparing to disclose its knowledge of the alterations on Monday.

“But the re-emergence of an old scandal, a risky constitutional revision debate looming, and potential contenders laying the groundwork for challenging Abe make it possible that he could face a tougher re-election fight than anticipated.”

Chief Cabinet Secretary Yoshihide Suga said Friday that he wanted the Finance Ministry to quickly provide an explanation about the land sale. Suga declined to comment on whether Aso should take responsibility.

Abe has repeatedly denied any involvement on his part, or that of his wife, Akie, in the sale of land to Moritomo Gakuen, an educational foundation that subsequently filed for bankruptcy.

The foundation ran a kindergarten in Osaka known for espousing elements of Japan’s prewar nationalist curriculum, as well as for its explicit backing of Abe, and had planned to use the land for an elementary school.

A JNN poll on Monday found Abe’s support below 50 percent for the first time in five months, and 80 percent of the respondents said there needed to be more explanation of the land sale.

The affair rocked Abe’s popularity last year, with his approval rating at some points falling below the disapproval rating, before a series of North Korean missile tests unnerved the public and gave him a boost after a snap election he was accused of calling to avoid further questioning.

A timeline of the Moritomo scandal events:

Feb. 9, 2017: Asahi Shimbun reports Moritomo Gakuen bought land from the government for a fraction of the price of comparable plots.

March 16: The government denies that Abe made a donation to the operator of the school.

March 23: The head of Moritomo Gakuen, Yasunori Kagoike, tells the Diet that he received a donation of ¥1 million in cash from Abe via Akie Abe. The government reiterates its denial that this happened.

March 24: Aso tells reporters that the sale of land to Moritomo was carried out with proper procedures and pricing.

April 21: Moritomo Gakuen files for bankruptcy.

July 31: Kagoike and his wife, Junko, are arrested for fraud.

March 2, 2018: Asahi Shimbun re-opens debate on the issue, reporting that the Finance Ministry may have altered documents related to the land sale.

March 9: The National Tax Agency chief resigns.