Prime Minister Fumio Kishida on Thursday attempted to contain the worst crisis of his administration yet, replacing nearly a dozen ministers and officials in political posts in the government who were caught up in the scandal over unreported political funds.

Former Foreign Minister Yoshimasa Hayashi replaced Hirokazu Matsuno as chief Cabinet secretary. Hayashi is the No. 2 man in a party faction headed until recently by Kishida. The other replacements are:

  • Former Justice Minister Ken Saito replacing Yasutoshi Nishimura as trade minister.
  • Former rural revitalization minister Tetsushi Sakamoto replacing Ichiro Miyashita as farm minister.
  • Former internal affairs minister Takeaki Matsumoto returning to the post, replacing Junji Suzuki.

Hayashi described his appointment as "coming out of the blue" later in a news conference.

"We go way back, being in the same faction since I was first elected as lawmaker in 1995," he said. "We can exchange candid opinions, or that's how I see our relationship."

Matsuno, three other Cabinet ministers and eight political appointees in the administration — all members of the 99-member Liberal Democratic Party faction named after former Prime Minister Shinzo Abe — resigned Thursday morning.

In addition, LDP policy chief Koichi Hagiuda and two other Abe faction party executives tendered their resignations. Kishida, however, asked Hagiuda to stay on until the government finishes drafting the budget for the next fiscal year later this month — something that needs interparty coordination.

The Abe faction is at the center of a scandal involving unreported funds from sales of tickets for events hosted by the party’s factions. A faction is a group within the LDP consisting of lawmakers who share a similar policy vision. Factions typically aim to promote their leaders to the role of party president, the holder of that title being most likely to then become prime minister and thus be better positioned to promote the careers of the faction members.

The Abe faction is suspected of offering unreported kickbacks from party ticket sales to members who sold more tickets than their assigned quota — to the tune of ¥500 million over the past five years.

On Wednesday, Hiroyuki Miyazawa, who resigned as deputy defense minister, said he had been told previously by someone in the Abe faction leadership, who he did not name, that the kickbacks did not need to be reported as political funds.

“I wondered, ‘Is that okay?’ But I figured it was probably legal if it's been going on for years,” he said.

With the parliament session having ended Wednesday, Tokyo prosecutors are now expected to step up their investigation into the scandal. That could lead to further allegations of wrongdoing by the Abe faction and others, and create further political headaches for the prime minister and his party.

With so many senior Abe faction members out the door, the faction finds itself in a weakened position of influence. Experts say that could lead to a shift in the balance of power between that faction, the one formerly led by Kishida, and the other party factions, and strengthen opposition against the prime minister by those Abe faction members who stepped down.

Kyoto-based Ritsumeikan University political scientist Masato Kamikubo said that the moves by Kishida now mean it’s possible angry Abe faction members could decide not to support him in next year's party presidential election. “The Abe faction believes it made Kishida prime minister. Therefore, they won’t be able to forgive him for excluding the faction from Cabinet and party executive positions,” Kamikubo said.

However, the Abe faction’s own future is unclear and the scandal means it could end up being dismantled, he added.

“Most senior figures of the Abe faction are no longer likely to become prime minister or receive future leadership posts due to the slush fund issue. Without its own candidate for prime minister, the Abe faction could split, as it would rapidly lose its centripetal force.”

What could be more concerning is that party lawmakers are increasingly distancing themselves from Kishida and his administration. In looking for Matsuno’s replacement, Kishida intended to tap someone who didn’t belong to a faction. However, former Defense Minister Yasukazu Hamada, a nonfaction member, declined the offer, as did “two or three” more lawmakers, Kyodo News reported.

In the end, Kishida appointed Hayashi to the position.

Kishida told reporters that he chose Hayashi and the three other ministers for their readiness to work — including the ability to coordinate and implement policies — as well as how they handle questions in parliament.

Kentaro Yamamoto, a political science professor at Hokkai-Gakuen University in Sapporo, said the prime minister would need to seek closer ties with the 56-member faction led by former Finance Minister Taro Aso and the 53-member faction led by LDP Secretary-General Toshimitsu Motegi to solidify his support base.

“The drifting of the Abe faction (which does not have a single leader) will force Kishida to establish a stronger relationship with the Aso and Motegi factions,” Yamamoto said.

But there is discontent simmering in the party, with some urging Kishida to take the blame for the funding scandal.

Former LDP Secretary-General Shigeru Ishiba told a TV program earlier this week that Kishida had options for taking responsibility.

“It could be an option for (Kishida) to resign after the budget passes. Dissolving (the Lower House) is also a way to take responsibility,” Ishiba said.