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Tuesday, Feb. 15, 2011

FYI

SECRET FUNDS

Secret funds shadowed by abuse


Staff writer

Paying ransom to win the release of kidnapped Japanese, buying off foreign dignitaries to reach backdoor deals and giving cash in exchange for secrets.

News photo
Spilling the beans: Hiromu Nonaka, chief Cabinet secretary in Keizo Obuchi's government from 1998 to 1999, poses in January in Tokyo. KYODO PHOTO

These are just some of the ways Japan's discretionary funds — known as "kimitsuhi" or "hoshohi" — are used, or so it is said.

The funds are set aside and kept under wraps to give the government a stash of cash for those times when officials believe the nation's interest is best served by secrecy.

But the secret funds have drawn criticism in recent years after retired lawmakers who were once in charge of them came clean on how the money was actually spent.

Following are questions and answers on the government's mysterious funds:

What constitutes secret funds and what is their purpose?

Kimitsuhi are defined as "expenses used to smoothly and effectively carry out government projects." But they are in fact made up of taxpayer money that government leaders can spend freely without having to report how.

There are primarily two such funds, one under the Cabinet Secretariat handled by the chief Cabinet secretary and the other controlled by the Foreign Ministry.

The stated purpose of these funds is to allow the government to spend wads of cash on anything from gathering intelligence to backdoor negotiations with other countries. It is also sometimes spent during negotiations to free Japanese citizens abducted in foreign countries.

Due to their nature, however, how the funds are used and where they end up is not disclosed and no paper trail is required.

For fiscal 2010, ¥1.46 billion was earmarked for the Cabinet Secretariat's secret fund and ¥2.7 billion for the Foreign Ministry's. In the case of the Cabinet Secretariat, the chief Cabinet secretary has access to a safe in the prime minister's office containing around ¥80 million in cash at any given time. About ¥100 million is spent each month. It's not clear what the size of the Foreign Ministry's stash is.

But what is the money actually spent on?

At the Cabinet Secretariat, a large portion of the cash is spent buying off opposition lawmakers to get key bills through the Diet, according to various sources, including former chief Cabinet secretaries.

For instance, when the bill introducing the consumption tax was submitted to the Diet in the late 1980s, the opposition parties attacked it fiercely.

To pass the bill, members of the then governing Liberal Democratic Party wined and dined opposition lawmakers night after night and gave them ¥1 million for "taxi fare" when they headed home, according to "Kimitsuhi" ("Secret Funds"), a book by journalist Takao Toshikawa.

A total of ¥1 billion in secret funds was spent during the 14 months it took to maneuver the bill through the Diet, Toshikawa's book says. The consumption tax came into being in April 1989.

In other cases, they have been used to pay for the social expenses of the prime minister and chief Cabinet secretary when they dine with lawmakers, business executives and foreign dignitaries. When lawmakers travel abroad on business, they customarily receive several hundred thousand yen in secret funds.

During an interview on TBS last April, Hiromu Nonaka, the chief Cabinet secretary in Keizo Obuchi's administration between 1998 and 1999, said he gave ¥10 million to the prime minister, ¥5 million to the Diet affairs chief of the ruling LDP, and another ¥5 million to the LDP's secretary general in the Upper House caucus each month.

So buying off lawmakers is a primary use of the funds?

Apparently yes, but lawmakers haven't been the only ones to benefit.

Nonaka said in the same TV interview that he also paid off political commentators — many of them former reporters — using cash from the secret funds.

Freelance political journalist Takashi Uesugi said he was once given a wad of bills in a white envelope after he had dinner with a chief Cabinet secretary.

"It was in a box of confectionary I received from the person, but I didn't realize until I got home," he said. "When I called to say that I can't take it, the person said it was an 'information fee.' "

According to Uesugi, he returned the envelope the next day, which he said appeared to contain several thousand yen. Uesugi assumed the money was secret funds.

After he started inquiring about the practice with lawmakers' aides, he was given documents showing that other political commentators and journalists had been targeted with the secret funds as well.

"I think it's all right for the government to try to buy off reporters, but reporters actually accepting it is a totally different story," Uesugi said, adding that cozy ties with politicians are preventing journalists from digging into scandals.

Has there been any illegal use of secret funds?

Yes, there was a huge scandal about a decade ago that made headlines for months, even years.

The scandal broke when the Yomiuri Shimbun reported in its Jan. 1, 2001, edition that a Foreign Ministry official was embezzling from its discretionary stash.

Two months later, Katsutoshi Matsuo, a ministry official in charge of logistics, was arrested for pocketing about ¥500 million in secret funds by padding hotel and other bills from prime ministers' trips and spending the money to buy racehorses, a luxury condominium and other extravagances. He was eventually convicted.

Extensive media coverage of the story and the secret fund itself brought to light details of how it was being used.

Then there was the case when sitting Chief Cabinet Secretary Takeo Kawamura, an LDP lawmaker, withdrew ¥250 million two days after the party was defeated in the 2009 general election and before the DPJ-led administration took power.

There is no way of knowing what the cash was spent on, but speculation was ripe that it was used for the LDP's election campaign fees. A group of lawyers in Osaka filed a lawsuit in January 2010 demanding full disclosure of its usage.

Have there been times when the secret funds were used to gather intelligence or for behind-the-scenes negotiations that served the nation's interest?

Yes. Secret funds were reportedly used for negotiation fees and intelligence-gathering when a Japan Airlines flight from Paris to Tokyo was hijacked by the Japanese Red Army in September 1977.

Kyodo News reported that about ¥200 million was paid as ransom from the Foreign Ministry's secret fund when 23-year-old Satoshi Nakamura was kidnapped by drug-runners in Iran in October 2007. He was released in June 2008.

It is no secret that a lump sum from the secret funds was spent on behind-the-scenes negotiations with South Korea to conclude a peace treaty in the 1960s. Tokyo hired Yoshio Kodama, a rightwing activist tied to the underworld who had deep connections with the South Korean side, for the negotiations.

That costly negotiation exhausted the Cabinet Secretariat's secret fund, prompting the Foreign Ministry to let the secretariat dip into its own — a custom that continued at least until early 2000. The amount was said to reach ¥2 billion a year.

How has the DPJ-led government handled the secret funds?

When the party was in the opposition it raked the LDP over the coals for lack of disclosure, but now that it is in power it hasn't been any more forthcoming, prompting similar criticism from the new opposition camp.

In 2001, the DPJ, while it was still in the opposition, submitted a bill that would force the government to disclose how the secret funds were spent 10 to 25 years earlier, depending on the level of secrecy. The bill was scrapped.

To prevent government leaders from misusing the secret funds, how the money is spent should be disclosed after a certain number of years, said journalist Uesugi.

"If there is a rule that specific details of the funds should be disclosed, even after 50 or 100 years, it would work as a deterrent" to misuse, he said.

The Weekly FYI appears Tuesdays (Wednesday in some areas). Readers are encouraged to send ideas, questions and opinions to National News Desk


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