How the kickback scandal in Japan is stirring trouble for PM Fumio Kishida

Japan is being roiled by a kickback scheme.

Multiple ministers in the Cabinet of Prime Minister Fumio Kishida have resigned after a kickback scheme has come to light in the ruling party.

The development comes as public approval for Kishida’s cabinet dropped to its worst-ever level since the Liberal Democratic Party (LDP) returned to power in December 2012.

Kishida has vowed to take ‘appropriate steps’ to regain the public trust.

But which ministers have resigned? And what do we know about this scandal?

Let’s take a closer look:

What do we know about this scandal

The scandal has engulfed the LDP’s Seiwaken or the Seiwa policy study group, as per CGTN.

This group, the largest faction in the LDP, was previously led by ex-Prime Minister Shinzo Abe.

It was recently headed up by Kishida himself.

Media reports have said key members of the faction – many of whom are in Kishida’s Cabinet and top LDP posts – have failed to report millions of yen in possible campaign violations.

It has been alleged that the money was disbursed to those members who managed to surpass their target for selling tickets to LDP fundraisers.

It is alleged that this money, which was not properly declared to the tax authorities, went into unmonitored slush funds.

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As per Japan Today, these tickets are usually priced at 20,000 yen.

The money is returned to those who exceed their goals as commission.

As per SMCP, prosecutors are looking into allegations that LDP officials received around 500 million yen (Rs 28 crore) in kickbacks over the past few years.

But CGTN quoted local media as reporting that the funds pooled amounted to around 100 million yen (Rs 5 crore).

The grouping was also suspected of failing to declare more than 20 million yen in the three years to 2020, the Asahi Shimbun daily reported.

CTGN quoted local media as saying that investigators have already interviewed secretaries of lawmakers.

It is claimed that at least 10 lawmakers were given kickbacks by the faction – with some being amounts of more than 10 million yen
(Rs 1 crore).

“If you are confident of selling (tickets), if you sell more than you are obliged to sell, that will all become your income, so that’s easy and great,” a senior official who used to work in the office of an LDP lawmaker told broadcaster ANN, with his face concealed and voice disguised.

Collecting proceeds from party events and paying kickbacks to lawmakers are not illegal if recorded appropriately under the political funds law.

Violations could result in penalty of up to five years in prison, but prosecution is difficult as it requires proof of a specific instruction to an accountant to not report the money transfer.

Which ministers have resigned?

Chief Cabinet Secretary Hirokazu Matsuno has announced he is stepping down.

Industry Minister Yasutoshi Nishimura, Internal Affairs Minister Junji Suzuki and Agriculture Minister Ichiro Miyashita have also tendered their resignations.

Michiko Ueno, a special advisor to the prime minister, is also leaving office.

Matsuno, the chief government spokesman, said five deputy ministers are also resigning.

Matsuno allegedly diverted more than 10 million yen ($68,700) over the past five years from money he raised from faction fundraising events to a slush fund, while Nishimura allegedly kept 1 million yen ($6,870), according to media reports.

He had earlier brushed off questions about his alleged involvement.

“I plan to fulfill the duties given to me,” he said on Monday when asked if he would step down.

NHK reported that ex-Olympic minister Hashimoto Seiko is among the lawmakers who allegedly received kickbacks.

Upper House member Ohno Yasutada’s office is alleged to have gotten $330,000 dollars in kickbacks.

Meanwhile, the offices of Lower House lawmakers Ikeda Yoshitaka and Tanigawa Yaichi are alleged to have gotten 270,000 dollars each.

“The public’s doubts are around me over political funds, which is leading to distrust in the government. As an investigation is going on, I thought I wanted to set things right,” Nishimura told reporters.

Kishida said a day before that he would deal with the allegations “head-on”.

“I will make efforts like a ball of fire and lead the LDP to restore the public’s trust,” he told reporters.

While most senior figures mentioned in the media remained mum, Vice Defense Minister Yiroyuki Miyazawa said Wednesday he was told by the Abe faction “it’s okay to not enter” his first kickbacks in 2020-2022 in the funds records and that he assumed it was a yearslong practice and legal, Miyazawa said.

Miyazawa also said he was ordered to keep quiet but had to speak out even though he may be expelled from the faction.

The amount he accepted is reportedly just 1.4 million ($9,600).

Former foreign minister Yoshimasa Hayashi, who belongs to Kishida’s faction, is expected to replace Matsuno, Kyodo News agency reported.

What happens next?

Things aren’t looking good for Kishida.

Kishida’s poll ratings have tumbled since being chosen as a safe pair of hands by the squabbling LDP in October 2021 over voter anger about inflation as well as his handling of a string of earlier scandals.

The latest survey published on Monday by Fuji TV and the Sankei Shimbun daily put public support for his cabinet at 22.5 per cent, down from 27.8 per cent last month, while the disapproval rating is at 71.9 per cent, up from 68.8 percent.

He already carried out a reshuffle in September and last month announced a stimulus package worth 17 trillion yen ($117 billion) to boost the flagging economy and ease the pain from rising prices.

The 66-year-old can govern until 2025 but there has been speculation that he might call a snap election ahead of a likely tough internal leadership vote in the LDP next year.

Analysts said that jettisoning members of the LDP’s biggest faction with around 100 members could make his job even harder.

“This may not necessarily give Kishida more freedom in governing, as the break with the Abe faction could complicate the administration’s management,” Naofumi Fujimura, professor of political science at Kobe University, told AFP.

“The scandal has significantly undermined public support for the LDP and the Kishida government. However, it remains uncertain whether it will result in a change of government, especially given the currently low public support for Opposition parties,” he said.

The scandal and a major purge of Abe’s faction, which was key to Kishida’s own future, could stir a power struggle within the party and influence the upcoming party leadership vote in September.

But the grip on power of the LDP, which has almost continually ruled postwar Japan, is seen unchanged as long as the Opposition remains fractured, analysts say.

‘Serious, bottomless problem’

Kishida on Wednesday faced a no-confidence motion submitted by Opposition groups led by the Constitutional Democratic Party of Japan. It was voted down because of the LDP dominance in both houses of parliament.

“The LDP has no self-cleansing ability,” CDPJ leader Kenta Izumi said. “It is questionable if they can choose anyone who is not involved in slush funds.”

Japanese Communist Party leader Kazuo Shii called the scandal “a bottomless, serious problem.”

Kishida has acknowledged that authorities are investigating the scandal following a criminal complaint. He said those who have faced the accounting questions must examine their records and explain to the public, but gave no timeline.

He also urged party lawmakers not to hold fundraising events, including year-end and New Year parties. Kishida is considering canceling his planned South American trip in January to deal with the scandal, media reports say.

“New revelations have emerged to expand the allegations surrounding the political fundraising parties of various LDP factions, taking the scandal into a new phase,” Japanese newspaper Asahi Shimbun wrote in an editorial this week.

“Fundraising parties have long been criticised for a lack of transparency and described as a hotbed for the creation of slush funds,” the editorial added.

It asked the LDP to “dig deep to get to the bottom of slush fund allegations.”

With inputs from agencies