Photo/Illutration Top officials and Cabinet ministers belonging to the Abe faction in the ruling Liberal Democratic Party are introduced at a May 2023 fund-raising party. (Asahi Shimbun file photo)

The Abe faction in the ruling Liberal Democratic Party exploited a loophole to conceal the distribution of proceeds from fund-raising parties to its members for years, investigative sources said.

Secretaries to Abe faction lawmakers told investigators that the faction secretariat said the money did not have to be listed in political fund reports because it constituted “policy activity expenses,” the sources said.

Under the Political Fund Control Law, companies and organizations are prohibited from making donations to individual politicians. But the law allows political parties to make donations to politicians in the form of policy activity expenses.

While a party is required to list the names of recipient politicians and the amounts of such donations in its political fund reports, politicians are not under such obligations.

Therefore, how the money is spent can remain entirely unknown.

Policy activity expenses offer a loophole in regulations that are designed to make the flow of political funds transparent.

The Abe faction is suspected of having distributed about 500 million yen ($3.5 million) in revenues from fund-raising parties to member lawmakers over the past five years without reporting the money in its political fund reports.

Investigators from the Tokyo District Public Prosecutors Office have questioned secretaries to Abe faction lawmakers on a voluntary basis.

Although policy activity expenses are not supposed to be transferred through an intraparty faction, the aides said the faction secretariat explained to them that the funds they received are “policy activity expenses that the LDP disburses to individual lawmakers,” according to the sources.

The secretaries also said that, based on the secretariat’s instructions, they have not reported the funds for many years in the political fund reports of their lawmakers’ political organizations, the sources said.

Prosecutors suspect such concealment of proceeds from fund-raising parties was systematic in the Abe faction, the sources said.

LDP Lower House member Yoshitaka Ikeda corrected political fund reports of his political organization as of Dec. 8 to add about 48 million yen in “donations” from the Abe faction.

The money is believed to be revenues from fund-raising parties that he received from the faction over the past five years.

Ikeda’s office said the funds had not been listed because they were considered “policy activity expenses that the party distributed through the faction.”

In principle, the LDP headquarters disburses policy activity expenses only to senior party members.

In 2022, 15 individuals, including the secretary-general, received a total of 1.42 billion yen.

When an LDP faction holds a fund-raising party, member lawmakers are usually assigned quotas for selling party tickets, which costs 20,000 yen each.

In the Abe faction, each member lawmaker gave revenues from ticket sales to the faction, but the faction later returned the portion exceeding his or her quota, sources said.

That flow of money was apparently kept entirely off the books.

The Abe faction did not list the money in either the income or the expenditure sections of its political fund reports. And the lawmakers’ political organizations also did not list the money in the income section of their political fund reports, the sources said.

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