Your Party says its former chief Yoshimi Watanabe broke no laws when he borrowed ¥800 million from a cosmetics company chairman just ahead of the 2010 and 2012 elections without reporting the loans as political funds. Yet the fact that his conduct is being questioned points to the inadequacy of current laws on ensuring transparency in the flow of political funds.

Watanabe resigned in early April as head of the small party he founded in 2009 — days after the massive loans from DHC Corp. Chairman Yoshiaki Yoshida were exposed in media reports. The party has since carried out an in-house probe of how Watanabe borrowed and spent the money. A report released by the party last week concluded that Watanabe did not break either the political funds control law or the public offices election law.

Initially Watanabe insisted that he borrowed the money as an individual and denied that he used the loan for political or campaign purposes — even though Yoshida himself told the media that Watanabe specifically asked for the loans to finance the party’s campaigns in the July 2010 Upper House election and the December 2012 Lower House election. Watanabe later changed his story and stated that the money was used to finance his party’s campaign in the elections and other political activities.

According to the probe, ¥710 million of the ¥800 million was either lent by Watanabe to Your Party to pay for campaign-related expenses or kept in his wife’s bank account, while Watanabe himself spent ¥55 million and his wife ¥35 million to cover expenses related to their positions, including wining and dining as well as travel fees.

The party also revealed that in addition to the ¥800 million he borrowed from Yoshida, Watanabe borrowed a total of ¥600 million from five other unspecified sources from 2010 onward. The party said Watanabe did not break the public offices election law because he did not use the money in his own election campaign, and that the money was not a donation to be reported under the political funds control law because he had paid interest on the loans. Earlier Watanabe stated that he had repaid Yoshida by the time he announced his resignation.

As Watanabe has emphasized, there are no regulations on politicians borrowing money as private individuals. When they tap into their private assets to pay for their political activities, they have no obligation to report their actions under the political funds control law. This means that they can use the money without declaring the source or the specific use.

The political funds control law is aimed at making the flow of political funds transparent so as to promote the healthy development of democracy. But Watanabe’s case shows that politicians go unpunished for using their personal money for political purposes that are undeclared because of the loopholes in the funds control law. Those loopholes need to be closed in order to ensure transparency in how politicians receive and use funds for their activities.

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