Photo/Illutration Former Prime Minister Shinzo Abe, center, leads a cheer at a May 2022 faction gathering for members scheduled to run in that summer’s Upper House election. Abe was murdered in July while campaigning in the city of Nara. (Asahi Shimbun file photo)

Prosecutors investigating a money scandal involving the ruling Liberal Democratic Party are now focusing on suspicions top officials realized what they were doing was probably illegal but let the matter pass.

The issue moved to the forefront of the investigation by the Tokyo District Public Prosecutors Office following revelations Abe faction bigwigs decided in April 2022 to scrap the practice of returning part of a slush fund created through fund-raising parties to its members but retracted the idea four months later after party veteran Shinzo Abe was fatally gunned down.

This, prosecutors contend, demonstrates beyond all doubt that the LDP hierarchy was aware of the illegality of the longstanding practice.

According to investigative sources, the faction once led by Abe set quotas for tickets to the fund-raising parties and any amount that exceeded an individual lawmaker’s quota was pooled into a “slush fund” and eventually returned to the lawmaker.

For the five-year period until 2022, the slush fund had ballooned to about 500 million yen ($3.5 million), sources said.

Prosecutors suspect that the Abe faction and individual lawmakers did not accurately report the payments of the excess amounts as either expenditure on the part of the faction and income on the part of the lawmakers.

As things stand, the faction officials handling accounting for the Abe faction are in the crosshairs of prosecutors for violating the Political Fund Control Law by not appropriately listing the excess amount as income and payments to the faction members as expenditures.

To demonstrate a co-conspiracy between those faction staff and high-ranking executives, a link must be made showing that those executives either ordered the excess amounts remain off the books or were fully cognizant that such bookkeeping crossed the line.

According to investigative sources, the pooling of the excess amounts and the nonreporting of that money was standard practice at the Abe faction for many years.

Abe returned to the faction as chairman following his decision to step down as prime minister in 2021 due to ill health.

In April 2022, a month before the faction’s annual fund-raising party, Abe, according to sources, suggested that the practice of returning excess amounts to faction members be stopped.

Other faction executives, including Yasutoshi Nishimura, who served as secretary-general of the faction at the time, agreed with Abe’s call and all faction members were notified of the change.

But some faction members were upset at the change because they had already begun selling the tickets to a fund-raising event on the premise the excess amount would eventually make it back to them, sources said.

Abe’s murder in July 2022 plunged the party in turmoil, and faction executives discussed what to do. One proposal was to have individual faction members list the excess amount from the faction fund-raising party as income from their own fund-raising party.

Tsuyoshi Takagi took over as faction secretary-general in August 2022. Eventually, Abe’s original proposal was retracted and the excess amounts from the May fund-raising party were returned to faction members as had been the past practice from the following month.

Sources said prosecutors are looking into whether faction executives knew as early as 2022 that the return of the excess amounts to faction members amounted to creative accounting. This would allow them to expand their investigation beyond faction staff in charge of accounting.

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