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Friday, March 20, 2009

Q&A

Hand-wringing over fund scandal

Politicians suddenly decide limits on campaign contributions need to be tougher


Staff writer

The political fund scandal involving Nishimatsu Construction Co. has brought to light once again the unhealthy relationship between politics and money. This time, prosecutors went straight to the top by arresting the chief secretary of Ichiro Ozawa, president of the Democratic Party of Japan.

But the scandal over the allegedly dirty money from Nishimatsu hasn't stopped there. Big names have surfaced within the Liberal Democratic Party as well — including Toshihiro Nikai, the minister of economy, trade and industry, former Prime Minister Yoshiro Mori and ex-Finance Minister Koji Omi. Prosecutors, however, have yet to arrest anyone from the LDP side.

The Nishimatsu scandal has spurred some politicians, Ozawa among them, to call for a complete ban on corporate campaign contributions through a revision of the Political Funds Control Law.

What's wrong with what Ozawa's aide and Nishimatsu did?

By law, corporate donations to individual lawmakers are prohibited. To get around this, Nishimatsu allegedly established two dummy political organizations and funneled money to various lawmakers.

In Ozawa's case, his chief secretary, Takanori Okubo, allegedly received ¥21 million from the two Nishimatsu-related organizations as head of Rikuzankai, Ozawa's political funding management body, knowing the money was really from the scandal-tainted company. Okubo is also Rikuzankai's chief accountant.

Why are corporate donations to individual lawmakers illegal?

Tomoaki Iwai, a political science professor at Nihon University in Tokyo and an expert on political funding, said corporate contributions are considered unseemly because they have an element of bribery, "enabling a company to have influence (on a lawmaker) by using money."

"But at the same time, companies are also a part of society and are affected by politics," Iwai said. "So, by permitting donations to political parties and their branches, it gives the companies a certain amount of access to politics."

The revision banning corporate donations to individual lawmakers was made in 2000, so now businesses can only contribute to parties or their branches.

Is there a cap on the amount a company can contribute?

Businesses are limited to doling out ¥7.5 million to ¥100 million in a single year depending on their capitalization.

Making or accepting illegal donations can draw as much as one year in prison or a fine as high as ¥500,000.

But aren't the parties' branches in each district headed by lawmakers from that district?

Yes. Iwai likens these branches to a franchise in which they fall under the control of individual politicians — "and that is a loophole," he said.

What are the parties' positions on accepting legal corporate donations?

The Japanese Communist Party refuses all corporate contributions.

When the Nishimatsu scandal broke, various key lawmakers in both the ruling bloc and other opposition parties began suggesting that more regulation should be added to the actual law.

On Wednesday, Ozawa ordered the DPJ to begin discussing the possibility of revising the law to ban all corporate donations. Social Democratic Party leader Mizuho Fukushima backed Ozawa's idea, saying the SDP also would like to see a blanket ban.

Key members of the LDP-New Komeito ruling bloc have expressed their eagerness to further regulate corporate donations but stopped short of calling for an end to all contributions from businesses.

Does the United States prohibit corporate donations?

Yes. The Federal Election Campaign Act of 1971 prohibits direct donations from corporations, labor organizations and national banks. Instead, the U.S. has political action committees, private groups voluntarily created to contribute to political campaigns.

Iwai pointed out that the method used in the recent scandal involving the two Nishimatsu-related organizations was similar to what PACs do in the U.S.

Would banning all corporate contributions solve the problem?

Not likely, Iwai said.

"I find it difficult to believe that politicians could continue their activities relying solely on individual contributions, going without corporate donations," he said, pointing out that the U.S. may have banned corporate contributions, but it legalized PACs.

"The reality would be that people would look harder to find ways (to get money to politicians) and could end up becoming more criminal," he said, suggesting that strengthening the penal regulations and enforcing further information disclosure would likely be more effective.



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