Political funds flowing into the coffers of political parties and political organizations nationwide in 2004 totaled 290.8 billion yen, down 9.8 percent from 2003. Of that amount, revenue collected by local party chapters and organizations came to 152.7 billion yen, a decrease of 16.3 percent from the previous year. This is the second time — the first was in 2002 — that the total has fallen under 300 billion yen since Japan’s financial “bubble” burst.

This decline occurred as public criticism mounted against the concealed donation of 100 million yen from the Japan Dentists Federation to the former Hashimoto faction of the Liberal Democratic Party (led by former Prime Minister Ryutaro Hashimoto). The brouhaha surrounding this incident likely led companies and business associations to reduce donations.

Furthermore, in the special session of the Diet convened after the Sept. 11 general elections, lawmakers passed a revision of the Political Funds Control Law that places an upper limit of 50 million yen on donations between political organizations. To ensure transparency, bank transfers — rather than cash — have been made obligatory when political-fund organizations of parties receive or give donations.

Despite those measures, however, a fundamental solution to the problem of politics and money has yet to be reached. The contents of the 2004 political funds report show that parties and political organizations rely increasingly on fundraising events. While total donations decreased in 2004, fundraising events were held by 1,282 organizations, with the total amount of money collected from them at 26.4 billion yen, up 16.7 percent from the previous year. This was the largest figure since record-keeping on fundraising events began in 1993. The reason, presumably, is that it has become more difficult to collect donations directly from companies and political groups.

But income from fundraising events is also giving rise to various problems. Recently it was discovered that the faction led by former Prime Minister Yoshiro Mori, which goes by the name of the Seiwa Policy Research Group, sold tickets to fundraising events to companies and individuals now implicated in the scandal involving the falsification of earthquake-resistance data for condominiums and hotels. The Mori faction has returned this money in full to those firms and individuals, but even tougher regulations are necessary to curb the growing reliance on this method of fundraising.

There also is a problem with the fundraising role played by local party chapters. To borrow the words of Prime Minister Junichiro Koizumi, the reformation of local chapters is the centerpiece of reform efforts. Local chapters have served as a loophole in the Political Funds Control Law. A previous revision of the law prohibited, beginning in 2000, donations from companies and other organizations to individual politicians. As a result, donations from companies and organizations have changed direction and started to flow to local chapters.

The problem is that it is possible to disguise individual offices as local party chapters. Hence we hear the constant criticism that some local chapters are nothing more than purses for individual politicians.

According to the political funds report for 2004, 109 Upper and Lower House legislators, up from 72 in 2003, had money transferred from local chapters that they headed to their own fund-management organizations. This setup clearly constitutes a loophole in donation regulations.

In addition, the LDP has far more local party chapters than other political parties. At the end of 2004, the number of LDP local chapters exceeded 7,000, compared with less than 500 for the Democratic Party of Japan, the No. 1 opposition party.

Under last year’s revision to the Public Funds Control Law, party headquarters now can submit notification of the dissolution of a local chapter. The real purpose of this revision was to give LDP headquarters the power to dissolve local chapters that were headed by rebel lawmakers who had opposed the postal privatization bills and run in the recent general election as independents. The revision has no practical effect on reform, however, if the power to dissolve local chapters is used only to purge troublesome lawmakers.

From the perspective of achieving transparency in the flow of political funds, the revision should be actively used as a new means of closing or integrating problematic local chapters. Ensuring transparency in political funds will be next to impossible without the reform of local chapters.

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