The Kan Cabinet's First Scandal

A new Cabinet has just been announced. Predictably, one of the new ministerial appointees is discovered to have some rather odd entries in his accounting books. Just as predictably, members of the opposition demand that the minister in question resign. The newspapers take up the tune of Japan's being unable to escape its "politics and money" (seiji to kane) problems.

From 2002 to 2007, the official Tokyo address of State Minister for National Policy Arai Satoshi Arai's political organization was a longtime friend's Tokyo condominium (manshon). In the annual expenses accounts submitted by the political organization to the Ministry of General Affairs and Communications (Somusho) a total of 42 million yen was listed office costs associated with the address, including around 27.5 million yen in personnel costs, 4.6 million in equipment and software and 10.1 million for "costs associated with maintaining an office" (jimushohi). According the friend, who has spoken to reporters, the condominium served only as postal contact point. No staff worked there, no equipment was installed there nor was any rent paid. Aside from handing over to the Arai organization any mail addressed to Arai or his organization that arrived at the condominium, the friend had no responsibilities or contact with the organization.

Arai, in response to questions from reporters, has said that he had submitted his political organization's account books to Democratic Party of Japan lawyers and campaign funding specialists and that the DPJ's experts had found no problem with the accounting.

Liberal Democratic Party Policy Research Council Chairman Ishiba Shigeru has predictably drawn parallels between Arai's use of the address of his friend's condominium with the office expenses scandals that led former Ministers of Agriculture, Forestry and Fisheries Akagi Norihiko and Ota Seiichiro to resign and Matsuoka Toshikatsu to commit suicide in 2007. He has says that Arai's having to resign is "a matter of course" and that Prime Minister Kan Naoto must take political responsibility for having named a tainted member of the Diet to his Cabinet. The LDP has said it is also looking at the Somusho reports of Education Minister Kawabata Tatso and Administration Reform Minister Ren Ho for similar odd assignments of offices expenses.

There is both less here and more here than meets the eye.

Political funding organizations are fluid and amorphous entities, with staff numbers and physical locations shifting with the political cycle, the career path of the member in question and that members financial resources. Expense accounts filed with the Somusho, however, need a legal permanent address for the organization. For some members having one's residence, the residence of one's parents or, as in this case, the residence of a friends serve as the nominal home of one's political organization is the only feasible option. It is an accounting fiddle, but a necessary and innocuous one, most of the time.

Whether Arai and Kan can stand the heat from both the LDP and the press will depend upon the level of detail in Arai's organization's books. Indications are that unlike Matsuoka, Akagi and Ota, who were knocked out by a lack of documentation or impossible-to-explain-expenses (Matsuoka's famous "water purification devices") the Arai organization seems to have kept all the necessary receipts for the expenses associated with the nominal office.