The criminal complaint filed in January by the Foreign Ministry against the former official in charge of logistics for VIP trips overseas has led to his arrest on a charge of fraud. An internal investigation has revealed that Mr. Katsutoshi Matsuo, who was fired in January for embezzlement, had swindled the government out of some 500 million yen since 1993 and that some of the money had been used to buy racehorses, golf-club memberships and other expensive items.

The Foreign Ministry has a confidential fund to cover travel and other ad hoc expenses. However, instead of using that reserve, Mr. Matsuo tapped into a similar fund in the Cabinet Secretariat. The reason is that a large proportion of the ministry fund is routinely transferred to the secretariat fund. A full investigation must be made into the entire money flow and the relationship between the two funds.

The Tokyo Metropolitan Police Department arrested Mr. Matsuo on Saturday on a charge of defrauding the government of 42 million yen in connection with official visits prime ministers made to Saudi Arabia, Vietnam and Jordan between 1997 and 1999. The MPD says he padded hotel bills and other expenses for Foreign Ministry and other government delegates. From 1993 to 1999, when he headed the Overseas Visit Support Division, Mr. Matsuo handled as many as 46 prime-ministerial trips abroad, effectively serving as treasurer for each journey.

Officials accompanying a prime minister on an overseas trip usually stay at a first-class hotel. The Cabinet Secretariat fund, created at the prime minister’s official residence, was meant to make up the differences between actual hotel bills and regular allowances. Mr. Matsuo, however, took out far more money than was needed to cover the deficits by submitting false reports. He not only gave extra cash to traveling officials, but deposited hundreds of millions of yen into his bank accounts to pay hotel bills and other expenses by credit card.

In all, Mr. Matsuo is said to have received 965 million yen in discretionary funds as expenses for the 46 foreign trips in question. According to a Foreign Ministry investigation, he put about 560 million yen in his deposit accounts and paid about 250 million yen for miscellaneous expenses, using his credit cards. The rest of the money — about 310 million yen — is still unaccounted for. The total amount of expenses that were padded is likely to increase as a result of further investigations.

The Matsuo case highlights not only a lack of transparency in the handling of official travel expenses, but also the loose management of the confidential funds. The Cabinet Secretariat, which allegedly paid as much money as Matsuo requested — without even checking his reports — bears grave responsibility. The Foreign Ministry, which overlooked the massive padding of expenses, cannot escape responsibility, either.

On the face of it, expenses for a prime ministerial trip abroad are paid for from the secretariat funds. However, the money reportedly originates with the Foreign Ministry’s confidential fund, which is by far the largest of its kind among government offices. Of this discretionary budget, 30 to 40 percent is said to have been transferred to the Cabinet Secretariat’s secret fund. A thorough investigation must be conducted to find out whether such transfers were really made and, if so, why and how such a dubious funding arrangement was made.

There is something fishy about these confidential funds. All these funds, it must be noted, use taxpayers’ money. There has always been suspicion about their use, particularly the Cabinet Secretariat fund, which reportedly has been used to pay for gifts for Diet members going on foreign tours or to cover social expenses involving opposition parties or certain election campaign bills. If the funds are used for these questionable purposes, then they should be abolished.

In reality, these secret funds are included as usual in the new government budget for fiscal 2001, which passed the Lower House earlier this month without change. The amounts remain at about the same levels as those for fiscal 2000, despite the public furor over the embezzlement scandal. The government has offered no credible explanations during Diet discussions on the matter.

The basic lesson of the Matsuo case is that public money beyond the reach of public scrutiny is temptation for irregularities or corruption. All confidential funds in the government should be re-examined as to their purposes and uses. If they are really necessary, they should be maintained with a reasonable degree of transparency. That is the minimum necessary condition for their continued existence. It does not matter if they are no longer secret. There is no justification for the disbursement of tax money unless it is properly accounted for.

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