Japan’s parliament on Wednesday enacted a revised law proposed by the ruling Liberal Democratic Party to reform political funding rules, despite opposition parties’ criticism that it fell far short of helping to resolve the issue of money in politics.
With the LDP under heightened scrutiny in the wake of a slush funds scandal that has significantly eroded public trust in politics, the Diet enacted the amended political funds control law just days before the current parliamentary session ends on Sunday. But the move risked further weakening Prime Minister Fumio Kishida’s fragile standing in the party.
The Japan Innovation Party, the second-largest opposition party, initially supported the bill but changed course and voted against it in the House of Councillors, claiming the LDP had failed to fully incorporate agreements reached by the two parties’ leaders, including establishing stricter rules for so-called policy activity funds.
Late last month, Kishida, who is seeking reelection in the LDP’s presidential election around September, made concessions to its junior coalition partner the Komeito party to secure the bill’s passage.
The concessions caused discord within the LDP, with former Prime Minister Taro Aso and Secretary General Toshimitsu Motegi, who have backed Kishida since he took office in October 2021, distancing themselves from him over the development, affecting his reelection bid, political pundits said.
With his Cabinet’s approval ratings plunging in the wake of the funds scandal, Kishida touted the revised law as “enhancing transparency” with regard to how politicians raise money, claiming it would be “highly efficacious” in restoring public trust in politics.
The main opposition Constitutional Democratic Party of Japan and other parties demanded more drastic changes while urging Kishida to dissolve the House of Representatives for an election.
One such demand was to introduce powers to find guilty by association and punish lawmakers in cases involving the misuse of political funds if their staff members are convicted.
The LDP has been rocked by the scandal, in which some of its factions failed for years to report part of their income from fundraising parties and accumulated slush funds. The party has been in power for most of the period since 1955.
While the political funds control law has been amended several times following financial scandals involving LDP members, critics point out it still contains loopholes that enable politicians to generate slush funds.
For example, the names of those who purchase fundraising party tickets worth up to 200,000 yen ($1,280) do not have to be recorded in political funds reports. The LDP initially proposed decreasing the threshold to 100,000 yen, but Kishida accepted Komeito’s request to lower the figure to 50,000 yen.
Many LDP lawmakers have opposed reducing the threshold, as they believe the revision would discourage companies and individuals who do not want their support for specific parties to be publicly known from buying fundraising party tickets, the pundits said.
The new rule, which takes effect in January 2027, has been criticized for allowing politicians to collect as much money as before, despite the reporting threshold being lowered, because the party can simply hold fundraising events more frequently.
The LDP was also asked to change the reporting rules for policy activity funds provided by parties to senior lawmakers. The party’s powerbrokers are not obliged to report how they use the money, even though their spending reaches hundreds of millions of yen.
The revised law makes it mandatory to disclose all policy activity funds for up to 10 years after they are made but does not specify when the system will come into effect, as Kishida has reiterated that the details will be considered after the legislation is enacted.
The amended law, meanwhile, does not include a ban on corporate donations to political parties, which have benefited the pro-business LDP, despite a backlash due to the practice being considered a form of bribery that could distort policy outcomes.
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