Will the LDP reform?

Kishida’s Halfway Political Reform

By Takuya Nishimura, Senior Fellow, Former Editorial Writer for The Hokkaido Shimbun
The views expressed by the author are his own and are not associated with The Hokkaido Shimbun
You can find his blog, J Update here.
January 27, 2024. Special to Asia Policy Point

On January 22, the Liberal Democratic Party’s (LDP) new Political Reform Headquarters released its “interim report” in response to the slush fund scandals of several LDP factions. Although the report proposes banning factions from hosting fundraising parties and eliminating the role of factions in money-raising and in appointments to cabinet posts and the party board, it does not ban factions. Missing from the report are the details of the scandal – an absence likely to exacerbate rather than quell public frustration with the LDP. Since the LDP has no specific plan to issue a final report, discussion of the scandal and the appropriate response to it has carried over to the Diet.

The Tokyo District Public Prosecutors Office investigated the scandals in which three LDP factions kickbacked to members the proceeds of ticket sales for fundraising parties that exceeded the quotas assigned to the members. The factions did not include the payments on their required political funds reports. The office has now wrapped up its investigation with the indictment of three lawmakers, all of whom are affiliated with the Abe faction, and seven accounting managers.

The prosecutor’s office did not, however, indict seven leaders of the Abe faction who were under investigation. While they were suspected of receiving kickbacks, the leaders explained that they did not know about the money since payments were the responsibility of the faction’s accounting managers. Although criminal prosecutions will not occur, it still is possible that the Committee for the Inquest of Prosecution will discuss the propriety of the non-indictments. Some in the LDP expect further penalties for the leaders, perhaps including expulsion from the party.

The interim report begins with an apology to the public for the kickback scandal. “The people doubt LDP with alleged inappropriate accounting over fundraising parties by specific factions,” says the report, emphasizing that the scandal has been about some specific and not all factions in the LDP.

The interim report calls for enhanced transparency of fundraising so as to prevent future mismanagement. The report also recommends the elimination of fundraising parties by factions and third-party audits for every faction. These recommendations assume that factions will continue to exist; the report does not speak to their possible elimination.

The report has loopholes. Although it would bar faction-led fundraising parties, it does not discuss such parties by lawmakers directly, which could present the same opportunity for kickback scandals. At one time, an LDP faction was group of lawmakers united by an influential leader who was powerful enough to distribute political contributions to faction members. Fundraising parties by individual lawmakers could bring back the old politics of control by bosses.

Also absent from the interim report is any discussion of “political activities spending,” which are distributions by the party to its leaders; how these funds are spent is not disclosed to the public. According to a report of Asahi Shimbun, the LDP distributed fund totaling ¥1.4 billion to fifteen leaders in FY 2022. Secretary General Toshimitsu Motegi received the lion’s share, ¥971 million. As long as factions exist, these distributions will continue, even if the LDP tries to stem the flow.

The report does urge that the factions return to their traditional role as genuine study groups. The report defines factions as “entities for studying policy and complementing party with political education.” But the LDP already has study groups. The LDP Policy Research Council has fourteen divisions, which hold meetings every morning for the study of policies with specialists or scholars. The LDP must explain the difference between these newer divisions and traditional factions as genuine policy groups.

Also requiring explanation is the recommendation to end the factions’ role in appointments to posts in the government and the party board. If this role is to end, the LDP needs to clarify how the party will elect the president. Article 10 of Rules for election of President requires at least 20 party Diet members to nominate a presidential candidate. Until now, nominations have rested on a balance of factions. With the loss of this role for the factions, the twenty members may constitute an informal, quasi-faction.

Disappointed with the report’s confusing approach to factions, some lawmakers have announced that they will leave their factions. The chair of Election Strategy Committee, Yuko Obuchi, will leave Motegi faction. Former Minister of Defense, Takeshi Iwaya, will resign from the Aso faction.

There have been other arguments about political funds, which are not addressed in the interim report. Some have argued that the threshold for reporting the names of buyers and the amount of ticket sales for a fundraising party should be lowered from ¥200 thousand to ¥50 thousand. This approach would be effective in regulating political funds because identification of the ticket buyers may deter local supporters.

Requiring the resignation of any lawmaker whose staff was arrested or indicted mismanagement or failure to report political funds should be another option. The Public Office Election Law already strips a candidate of an election victory if a staff member committed illegal activities such as bribery. This provision could be expanded to cover the mismanagement of political funds.

LDP’s coalition partner, Komeito, and the opposition parties support the recommended reforms on political funds. The reforms are matters for the Diet since amendments to laws will be necessary. The ordinary session of the Diet was convened on January 26. During a discussion in the Diet on January 29, Kishida appeared willing to consider a “guilt-by-association” system that hold lawmakers responsible for political funds control law breaches by their staff. Nevertheless, he was reluctant to disclose political activities spending. Kishida will face hard questions during in the rest of the current Diet session that ends June 23rd.