The Enigma of Japanese Power (20 page)

In the wake of the 1974 elections and the Lockheed scandal, the newspapers became obsessed with
kinken seiji
, money politics, and
seiji rinri
, political ethics. They had discovered that ‘what Tanaka’s discerning eye saw above all was that money was indeed the mother’s milk of politics and that whoever controlled the largest amounts, controlled the system’.
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Money politics was universally decried. No one could defend it publicly, or explain in the press that without it there would be no LDP. The immediate ‘remedy’ was a tightening of the Political Fund Control Law, thus indicating that the relationship between the LDP and business remained an area where all was not as it should be. The term ‘political ethics’ as used by editorial writers and politicians of all stripes came to mean, simply, the ejection of Tanaka from the Diet. It became a weapon in the continuing fights among LDP
habatsu
, and a rhetorical device of ceremonial opposition. If Tanaka could only be forced to resign as a representative of the people, the Japanese political world could begin to clean itself up: such was the drift of numerous editorials until 1985.

The regulated money-flow from business to LDP underlines the officially approved partnership of the two. Leaders of the
zaikai
– the cream of Japan’s financial, industrial and trade organisations – played a major part in the process that led to the birth of the LDP in November 1955, and it was only natural that they should keep it alive by providing the necessary funds. Organised political funding already had a long history, and the two major pre-war parties – both thoroughly co-opted by the bureaucracy – were each paid by one of the two largest business conglomerates: Minseito by Mitsubishi, and Seiyukai by Mitsui.

Until the merger of the Liberal Party and the Democratic Party in 1955, the political bosses received most of their money personally from individual businessmen, and those friendly with the most generous tended to climb highest. But this led to scandals, which undermined popular trust in the early post-war political system. The
zaikai
was extremely worried about possible political gains by the left, and in January 1955, at the height of their campaign to neutralise this threat, the four major business federations established the Economic Reconstruction Round Table to arrange a better funding system. The organisation was headed by the then vice-president of Keidanren, Uemura Kogoro, who had played a pivotal role in linking up military and civilian economic planners before the war, and was one of the top bureaucrats in charge of wartime economic planning. Its purpose was to channel money directly to the parties’ headquarters, thereby obviating the factionalism and unseemly individual scrambles and helping to unify the ‘conservatives’.
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Its successor, the People’s Association (Kokumin Kyokai), established in 1961 and renamed People’s Political Association in 1974 (a cosmetic change brought on by the ‘money politics’ scandal), supplied some nine-tenths of the LDP’s official income in the late 1960s and 1970s.

Every year, at a New Year’s meeting with business representatives, the three top LDP executives formally request ‘donations’, mentioning a ‘target’. In 1985 this was 10 billion yen. Which sector will donate how much is decided later by discussion among industries themselves. Between New Year’s Day and the beginning of the new fiscal year on 1 April the director of the LDP’s treasury bureau must visit several hundred industrial federations and large enterprises to encourage the flow of donations.
⁵⁸
Ministry of Home Affairs figures show that each time an LDP politician reaches a recognised higher position, the donations he receives from businesses rise by between 55 and 100 per cent. In 1985 Nakasone Yasuhiro received five times as much as in the year before he became prime minister.

A new method of increasing permissible funding from corporations is for associates of an LDP politician to organise ‘encouragement’ parties and charge between 20,000 and one million yen for tickets. Companies are sometimes forced to buy a number of these tickets through their industrial association. The hotels at which the parties are held may also sell tickets to business associates and other members of the
keiretsu
to which they belong. Such tickets do not violate the law, and the supervising Ministry of Home Affairs considers them ‘payment for refreshments’. In two months of partying in Tokyo and Osaka in 1984 LDP member Tamaki Kazuo netted a profit of 445 million yen ($2.6 million at the then exchange rate) on the refreshments he served, in addition to the officially declared 1,229 million yen ($7.2 million) from formal donations in his constituency.

Ministries chip in, too. As one career official complained to a newspaper reporter:

Many times I have bought tickets for the parties of prominent members of a Diet committee related to my work. The expense was covered by our ministry’s budget. Besides that we also have to pay from our own pocket for tickets of politicians with whom we must cultivate connections. I personally go to about 15–20 parties in a year, which is a financial burden for me.
⁵⁹

Particularly in the case of the LDP, registered income is only a small part of the picture. There are many indirect ways of collecting money from the business world. One is through the stock market. Insider trading is very common in Japan, and a politician may buy stock that will subsequently shoot upwards in value through a variety of manipulations. (Insider trading is in theory, of course, not allowed. But between 1948 and 1987 only one case resulted in prosecution. Japanese corporations and brokers are not subject to the kind of regulatory supervision to which Western stock exchanges are submitted. If they were, the
keiretsu
structure would be endangered, and large securities houses would be out of business.) The money that LDP politicians collect in their own prefectures need only be registered with the local authorities, and no one keeps track of this. More significantly, all important LDP members have secret and very lucrative arrangements with corporations and banks, and there are ‘tunnel organisations’ channelling money to individual
habatsu
.

This unregulated flow of money from business to politicians is an old tradition. An early foreign commentator on Japanese politics marvelled at the immense fortunes made by Meiji-period party politicians through bribes. Once Diet politicians discovered the power they had unwittingly been given in the right – the only significant one they had – to force the government to make do with the previous year’s budget, they were systematically bribed by the bureaucracy as well.
⁶⁰
They needed it, for the custom of buying votes appears to be as old as electioneering in Japan.
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Contemporary LDP politicians can be very open about their ‘secret’ income. Accompanying them on routine trips through their constituencies, I have actually seen them accept tens of millions of yen in a brown paper bag. Registered income is only a fraction of what LDP politicians need to maintain their staffs and
koenkai
in normal years, to buy votes indirectly in election years, to buy the support of rival
habatsu
as they climb to the party presidency and sometimes to bribe ‘opposition’ parliamentarians as part of their intricate political manoeuvres.

It is impossible to calculate a reliable average, but I estimate that in a year without elections in the mid-1980s it cost about 400 million yen (some $3 million by the 1987 exchange rate) to maintain a presence in a constituency.

And these are just basic expenses. Komoto, owner of the once heavily protected Sanko Steamship Company, attracted wide attention with a dramatic attempt to buy the prime ministership. Following introduction of a new party rule providing for a primary among grass-root LDP members as a way of ranking candidates for the party presidency, the figure of 1.4 million party members in 1979 suddenly swelled by another 1.7 million. When it subsequently became clear that the primary would not after all be held, the party ‘lost’ practically all of these, and the count was back to 1.4 million in August 1980. Komoto himself had paid the membership fees of a majority of them.

Tanaka’s election to the party presidency allegedly cost between three and five billion yen. The re-election of Nakasone as LDP president in 1984 cost his
habatsu
more than one billion yen, and another billion was kept in reserve to cope with unexpected problems.
⁶²

The benefits that the business community buys with the money spent on LDP politicians are fairly clear-cut. In 1984 the most generous with (registered) donations, accounting for about a third of what businesses officially spent on the LDP, were the commercial banks. No wonder that the highly touted liberalisation of the financial sector helped only Japanese institutions. The traditionally high contributions from the protected steel and machinery sectors were followed, in third place, by the telecommunications industry, 11 per cent of the total. This was a year in which the United States had been pressing hard for the opening of the telecommunications market.

One specialist has found that

the commission charged by the Tanaka machine to get the bureaucracy to act – for example, to get a building contract out of the Ministry of Construction or to slow down the implementation of some market opening scheme from the Ministry of Posts and Telecommunications – was three percent of the value of the project.
⁶³

LDP members who mediate on behalf of city or prefectural governments for public projects paid for by the central government routinely receive 2 per cent of its value.
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One could cite endless other examples. Doctor and dentist associations gave more than a billion yen in registered donations in 1984. They give much every year in return for continued tax privileges and government toleration of the racketeering made possible by the health insurance system. In the early 1980s companies running supermarkets splurged on tickets to fund-raising parties, having belatedly realised that bureaucratic regulations unfavourable to them could have been modified if they had cultivated the right LDP members.
⁶⁵
During a debate at LDP headquarters in 1984 as to whether office automation equipment should be taxed, a large group of LDP members flocked to the meeting room and loudly proclaimed their opposition within earshot of industry representatives in the corridors. As Kato Mutsuki, chairman of the LDP research commission on the tax system, has said, it is easy to tell who is close to what industry.
⁶⁶
He himself has the most intimate
jinmyaku
ties with the Ministry of Transport, and is extremely friendly with the Japan Federation for the Promotion of Car Mechanics (the latter protects the interests of some 78,000 garages with 570,000 repairmen, a good portion of whose income is derived from the mandatory biennial tests that cost all car owners roughly 200,000 yen a time). He was in the front line of the fight against proposed reform of this system, which is generally considered to be a colossal racket.
⁶⁷
Again, life insurance salesmen have been actively promoting LDP candidates prior to elections, and by no coincidence the LDP in 1984 proposed, despite opposition from the Ministry of Finance, certain income tax exemptions desired by the insurance companies.

Business sectors, especially those whose markets are expanding or shrinking or otherwise stand to benefit from government interference, tend to rank politicians according to their knowledge of the problems of the industry in question, the degree of their willingness to co-operate and past services rendered. The politician may expect financial support in accordance with that ranking.

Few post-war Japanese prime ministers have not been tainted at some point in their career by scandal or the suspicion of corruption owing to their symbiotic relationships with businessmen. Yoshida Shigeru milked the coal companies in connection with a law for the reconstruction of key industries.
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Kishi Nobusuke was a political merchant, suspected of having made a fortune in connection with reparations, aid loans and concession hunting in Taiwan, Vietnam, the Philippines, Indonesia and South Korea.
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The shadowy fixer Kodama Yoshio was one of Hatoyama Ichiro’s major financial supporters after the war. Ashida Hitoshi and Fukuda Takeo were indicted in connection with the Showa Denko scandal that caused a big stir in 1948. Ikeda Hayato and Sato Eisaku were involved in the shipbuilding scandal of 1954. A series of scandals that came to light in the 1960s, and were dubbed ‘the black mist’ by the press, appeared at one point or another to involve practically everyone who was anyone in the LDP.
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Even though these and other scandals have caused intermittent outcries, corruption in Japan is in a sense legitimised by its systematic perpetration. It is so highly organised, and has become so much a part of the extra-legal ways of the Japanese System on so many levels, that most citizens and foreign residents do not recognise it for what it is, but accept it as ‘part of the system’. The press calls it ‘structural corruption’, implicitly acknowledging that it is a necessary aspect of the System in its present condition.

If everyone in Japan accepts the situation, why was such a fuss made over Tanaka’s money deals that he had to resign as prime minister? And why the continuing hullabaloo over Lockheed? The fact that the Lockheed scandal was first exposed in the United States undoubtedly made it more difficult to sweep it under the carpet. Even so, why was Tanaka incessantly pilloried after 1976? Three years after his arrest, it was revealed that another aircraft manufacturer, McDonnell Douglas, had paid as much as Tanaka received from Lockheed (500 million yen) to the director-general of the Self-Defence Agency. Yet the spark of scandal was swiftly extinguished, and practically no one remembers it now. Why Tanaka?

Everyone knew that it had cost a great deal of money to climb to his position, to strengthen his
habatsu
, to do what he did for the people of Niigata and to get the bureaucracy to act on schemes he believed beneficial to Japan. The money must have come from somewhere; no Japanese politician gets by on his own money alone. This had been illustrated by
habatsu
leader Fujiyama Aiichiro, a famous businessman and former foreign minister who almost bankrupted himself trying in vain to become prime minister.
⁷¹
Ikeda Hayato, in advising the members of his
habatsu
, had made no bones about where political funds ought to come from – not from one’s own pocket or from one’s own business; others should take care of a politician’s expenses.
⁷²