The largest faction of the ruling Liberal Democratic Party is suspected of having misappropriated revenue from fundraising parties to support upper house election campaigns for years, a source familiar with the matter said Saturday.
The faction had returned to lawmakers running for House of Councillors elections all revenue from sales of fundraising tickets they sold for the group without declaring the income in political funds reports, intending to use them as secret funds, according to the source.
Prosecutors are looking into the matter as possible violations of the political funds control law, which requires an accountant to submit a report on income and expenditures.
Prime Minister Fumio Kishida's government has been roiled by the recent political funds scandal involving his party. According to allegations, LDP factions have traditionally set quotas for lawmakers on the sale of party tickets, and, in some groups, the extra funds are passed back to them as a type of commission if they surpass their targets.
The faction, previously led by former Prime Minister Shinzo Abe, allegedly failed to report the extra funds as income in the group's political funding reports and did not indicate that those funds were passed back to lawmakers as expenditures. Its lawmakers also did not report receiving the money.
It returned not only the extra funds but all ticket revenue to upper house members in their election years, which come every three years for half of the seats of the chamber of Japan's bicameral legislature, the source said.
The measure has not applied to House of Representatives lawmakers whose elections are not held at fixed intervals, as the prime minister has the authority to dissolve the lower house at any time to call a snap election.
The 99-member faction, which accounts for more than a quarter of the LDP's lawmakers, informed its members around the spring of 2022 that the faction would end the kickbacks, in line with Abe's intentions, according to the source.
But following Abe's assassination in July that year, the plan was withdrawn amid a backlash over the sudden policy change and in light of an upcoming upper house election that month.
The most recent upper house elections were in 2019 and 2022. Former trade minister Yasutoshi Nishimura served as faction secretary general until August 2022 and was succeeded by former Diet affairs chief Tsuyoshi Takagi.
Slush funds at the faction are believed to have reached 500 million yen ($3.5 million) over the five years to 2022, and any crimes of failure to declare items or make false statements in political funds reports during this period are still punishable, as the statute of limitations has not expired.
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