Japan Data

Is Japan’s Political Funds Control Act Working as Intended?

Politics Society

Japanese politics is being rocked by a scandal involving the ruling Liberal Democratic Party’s political funding activities. The Political Funds Control Act is meant to curb excesses and keep tabs on money coming in to the country’s parties, but politicians are clearly finding numerous ways to evade its restrictions.

The history of Japan’s Political Funds Control Act stretches back to the early postwar years, when the General Headquarters of the Allied Forces occupying Japan implemented regulations in 1948 to prevent corruption in politics. Over the decades since then, the law has been strengthened from time to time in response to developments like the bribery allegations that put an end to Prime Minister Tanaka Kakuei’s administration in 1974 and the Recruit scandal, in which insider trading brought down numerous politicians in the late 1980s. Major revisions to the act have been implemented 12 times in all, according to the MIC, or Ministry of Internal Affairs and Communications.

Politicians’ reports on political funding for calendar year 2022, on display at the Ministry of Internal Affairs and Communications on November 21, 2023. (© Jiji)
Politicians’ reports on political funding for calendar year 2022, on display at the Ministry of Internal Affairs and Communications on November 21, 2023. (© Jiji)

It is worth beginning with a definition of what actually constitutes “political funds.” This catch-all term covers money spent on political activities by parties and candidates seeking public office; the money comes primarily from donations from individuals, corporations, and other organizations, in the form of public grants to political parties funded by taxes, and revenues from fundraising parties and the like. Political organizations in the country are required to submit reports on how they collected and spent political funds in the previous year to the MIC or to prefectural election administration commissions.

The reports fundamentally cover four areas: donations, fundraising party revenue, expenditures, and assets. Individuals donating more than ¥50,000 and organizations purchasing party tickets worth more than ¥200,000 in a year must be named in the reports, and all expenditures on political activities clearing the ¥50,000 mark must have a clearly listed recipient.

One frequently noted loophole in the law is the lack of a requirement to name buyers of party tickets totaling less than ¥200,000 in a single purchase. While the Political Funds Control Act bans donations to individual politicians by companies and other groups, fundraising parties can be hosted by political organizations affiliated with single politicians, opening a route for companies to funnel money to them. The tickets for these gatherings are often purchased with cash, making them fertile ground for under-the-table payments, according to many observers. What is more, corporate donations to political parties remain legal, and the parties often then donate money to the political groups affiliated with their members, thus making it difficult to track the flows of funds. All of this has contributed to the Political Funds Control Act’s reputation as being full of loopholes.

Among efforts to tighten up legislation over the years, the ban on corporate or group donations to individual politicians came in 1994. This was expanded to disallow such donations to politicians’ fund management organizations in 1999. Then, an audit system was introduced for political funding in 2007.

Political Organizations’ Annual Revenues

MIC data shows that a total of 58,164 political organizations filed funding reports with the ministry or prefectural commissions for calendar 2022. Total revenues for that year reached ¥209.7 billion, up 1.4% from 2021, while expenditures were ¥206.3 billion, down 0.9%. Fundraising party tickets accounted for 8.6% of the total, at ¥18.1 billion, a considerable drop from the all-time high of ¥27.4 billion brought in at parties in 2006.

(Originally published in Japanese. Banner photo: Prime Minister Kishida Fumio, at right, raises his glass with other members of the LDP’s Kishida faction at a Tokyo fundraising party on May 17, 2023. © Jiji.)

politics law funding