If Liberal Democratic Party (LDP) factions are rampantly implicated in systematically creating secret reserves using political funds for shady purposes, the ruling party could be accused of betraying the public and eviscerating the Political Fund Control Law.

Prime Minister Fumio Kishida should take the allegations as a serious matter that could undermine the foundation of the LDP and ensure that the party will accurately ascertain the facts and fully disclose them.

New revelations have emerged to expand the allegations surrounding the political fund-raising parties of various LDP factions, taking the scandal into a new phase.

First came the revelations that five LDP factions failed to report some of the income from their fund-raising parties.

After accounting discrepancies that violated the requirement that the names and the amounts of party ticket purchases exceeding 200,000 yen ($1,360) each must be specified in political funding reports came to light, these factions hastily corrected their respective funding reports.

Now, it has been revealed that the largest LDP faction, which was once led by former Prime Minister Shinzo Abe, created a slush fund by pooling some of the money collected through these fund-raising parties.

The Abe faction allegedly amassed more than 100 million yen in the undeclared fund over a five-year period by not reporting the related income and expenditures to the authorities. 

Initially, the Abe faction and other groups claimed the reporting errors were simple “clerical mistakes” stemming from a failure to consolidate the amounts when the same entities purchased tickets through multiple routes.

The data matching and consolidation process is known as “nayose” in Japan. However, the creation of a covert fund can only be intentional.

The Tokyo District Public Prosecutors Office's Special Investigation Department is investigating the allegations with an eye to bringing criminal charges against those responsible for violating the law in the form of misreporting.

A thorough and comprehensive examination must be done to clarify why the faction had to set up such a secret reserve and how the money was actually used.

The Abe faction is suspected of engaging for years in operating a slush fund pooled from the amounts raised through parties that went beyond the sales quotas assigned to faction members as a clandestine vehicle to return the money to the members as kickbacks.

There have reportedly also been cases where the amount exceeding the quota was not paid to the faction but kept as undeclared funds by the members themselves.

These facts indicate that political funding misconduct was endemic within the faction while Abe maintained his prolonged rule by remaining in power for seven years and eight months.

The political reform centered on the introduction of a combination of single-seat constituencies and proportional representation for Lower House elections was partly aimed at breaking away from money politics.

The electoral system was revamped as a move based on soul-searching over a string of political scandals, including the Recruit shares-for-favors scandal and the Sagawa Kyubin pay-off scandal.

While establishing a system of providing state subsidies to political parties funded by taxpayer money, the legal ban on political donations by businesses and organizations was limited to contributions to individual politicians, allowing companies and other types of organizations to provide funds to political parties.

The avenue for political funding through the purchase of party tickets has also survived the reform. Parties are required to disclose the names of donors who have provided more than 50,000 yen in straightforward political contributions. But they are mandated to report only party ticket purchases that exceed 200,000 yen each.

Fund-raising parties have long been criticized for a lack of transparency and described as a hotbed for the creation of slush funds. The latest scandal involving such parties must be taken as an opportunity to enact a fundamental reform.

Following the Abe faction, the faction headed by former Secretary-General Toshihiro Nikai has also been implicated in the scandal. The group is suspected of having conducted off-the-books dealings involving more than 100 million yen in income from fund-raising parties over five years.

While some of the fund flows were recorded in the factions' and members' funding reports, there is no denying that these documents did not accurately reflect the entire picture.

At a Dec. 4 meeting of LDP executives, Kishida stated, “We will consider the party's response (to the scandal) while working to grasp the situation.”

Are there any other factions that were engaged in similar accounting irregularities or creating off-the-books funds?

To restore trust in the party, it is essential for the party leadership to take the initiative to clarify the entire picture and not leave the matter to the factions to handle.

--The Asahi Shimbun, Dec. 5