Explained: What is the Japanese fundraising scandal that has engulfed Fumio Kishida govt?

Tokyo

Japan's ruling Liberal Democratic Party (LDP) is facing one of its biggest challenges in decades. There are allegations that some LDP lawmakers received thousands of dollars in unreported funds. Heads will roll, as Prime Minister Fumio Kishida is set to replace some tainted ministers as early as Thursday (Dec 14), according to reports.

This scandal comes as Japan is heading to a national election in October 2025. Even though the LDP has held power for almost all of Japan's post-war history, the scandal might weaken its hopes of retaining power.

A poll showed that Prime Minister Kishida's government's popularity hit a record low, while the LDP's coalition partner warned that any rule-breaking would not be tolerated, Reuters reported on Monday (Dec 11). 

Addressing a press conference on Monday, Prime Minister Kishida said his government would consider appropriate measures at the right time to restore public trust.

What is the Japan funding scandal about?

In Japan, politicians, political parties and their factions hold fundraising events to increase revenue through ticket sales. According to a report by Nikkei Asia, these fundraisers are often hosted by groups supporting political parties and politicians or by factions' administrative bodies.

One ticket for such an event would cost around $138 (20,000 yen). Profits from such an event can go towards political parties. Citing a political funding statement, the report said that Prime Minister Kishida raised about $1.03 million from eight fundraisers last year. They cost a total of 19 million yen, leaving 87% of the money raised as profit, the report added.

Also read: Japan PM Kishida's popularity further depletes over 'secret funds' scandal

According to the law, political parties are required to report revenue from fundraising events if any individual or company purchases more than $1,375 of tickets in a year. A report by The Japan Times said that as long as the flow of money is reported adequately as stated in the law, there is nothing wrong with holding a fundraising event.

What caused the recent scandals? The Japan Times report said that underreporting allegations surfaced last month when news came out that five major LDP factions made nearly $275,000 from ticket sales that were not reported under law in the four years through 2021.

The factions here were the Kishida faction; the faction of former secretary-general Toshihiro Nikai; the Aso faction; the faction of LDP Secretary-General Toshihiro Motegi, and the faction that was led by the former PM Shinzo Abe- who was assassinated in July last year.

The factions claimed that there had been a mistake and they revised their political funds report. At that time, the damage appeared limited, the report said.

However, on Dec 1, a report by Asahi Shimbun said that the Abe faction, the largest in the LDP, made off-the-book income in ticket sales worth over $687,000. Faction members who sold more tickets than the allocated quota were given the surplus as kickbacks.

The Nikai faction, meanwhile, was suspected of underreporting income from ticket sales for fundraising parties, and of rewarding lawmakers who sold excess tickets with the surplus cash.

The report further said that the Abe faction was suspected of failing to report both the excess revenue and expenditure for lawmakers. The Nikki faction, on the other hand, failed to report the revenue but reported the expenditure as a donation.

PM planning to purge ministers embroiled in scandal

Facing heat over the scandal, Prime Minister Kishida pledged on Monday to restore trust in his government. There have been reports that Kishida was planning to purge ministers embroiled in the scandal.

Last Sunday, a report by the Asahi newspaper said that the prime minister decided to replace four ministers and 11 other ministerial positions in his cabinet. The reshuffle could come as early as Thursday.

Also read: Deputy finance minister of Japan resigns after tax scandal in another blow to PM Fumio Kishida

Those to be replaced include Chief Cabinet Secretary Matsuno Trade Minister Yasutoshi Nishimura, Internal Affairs Minister Junji Suzuki and Agriculture Minister Ichiro Miyashita.

Trade Minister Nishimura said that he would stay in his post and review his political funding. "I am closely examining my own political financing report, and would like to provide a thorough explanation at the appropriate time," Nishimura told reporters on Sunday.

On Tuesday, the main opposition party- Constitutional Democratic Party- is preparing to bring a no-confidence motion against Kishida's cabinet, local media reported. 

A decline in Kishida govt's popularity

Fumio Kishida, who became prime minister in 2021, has seen his cabinet's approval rating slide in recent months. This was mainly due to worries about rising living costs and looming tax hikes to fund his military build-up plans.

During the weekend, a survey by the Fuji News Network-Sankei said his administration's popularity sunk to a record low of 22.5 per cent, down 5.3 percentage points from the previous month.

About 46 per cent of responders in the survey said they wanted Kishida to stay in power until his tenure as LDP leader expires in September next year, while about 41 per cent wanted him replaced immediately.

(With inputs from agencies)