Japanese Prime Minister Fumio Kishida pledged Thursday to establish rules to enhance the transparency of factions within his ruling Liberal Democratic Party following a political fundraising scandal involving its largest policy group.

Kishida said at a press conference that he is eager to strengthen the governance of the LDP by setting up a "political reform" panel led by him next week in an attempt to restore the public's trust in politics.

Later in the day, Kishida said former prime ministers, LDP Vice President Taro Aso and Yoshihide Suga, will join the panel as advisers.

Japanese Prime Minister Fumio Kishida holds a New Year press conference at his office in Tokyo on Jan. 4, 2024. (Kyodo)

His remarks come as the LDP's biggest faction, formerly headed by slain Prime Minister Shinzo Abe, is alleged to have created slush funds by failing to declare hundreds of millions of yen in revenue from fundraising parties in its political funding reports.

Senior members of the faction, such as former Chief Cabinet Secretary Hirokazu Matsuno, have already been questioned amid allegations that lawmakers within the group have used slush funds for activities related to elections or promotions.

The political funds control law requires an accountant to submit a report on income and expenditures. A failure to report can be punishable by imprisonment for up to five years or a fine of up to 1 million yen.

Kishida said at the news conference that if necessary, his government will consider revising the legislation, which has often been criticized for containing loopholes enabling lawmakers to generate slush funds.

The latest scandal was ignited by a criminal complaint alleging that five of the LDP's factions, including one led until recently by Kishida, underreported fundraising party revenues.

Prosecutors suspect the Abe faction returned a portion of fundraising party revenues that its members raised from ticket sales, investigative sources said. The amount is believed to have totaled more than 500 million yen ($3.5 million) over five years through 2022.

The total amount of money that individual lawmakers of the Abe faction put in their pockets after selling party tickets above their quotas reached at least around 80 million yen over five years from 2018, the sources added.

The approval ratings for Kishida's Cabinet have plunged to their lowest levels since it was launched in October 2021, as the funds scandal increases political distrust among the public.

Kishida, who headed the fourth-largest faction within the LDP, has expressed his willingness to be reelected as the leader of the ruling party and the prime minister by winning its next presidential race scheduled to be held in September.

On Thursday, Kishida declined to comment on the presidential election, only saying, "I will devote myself to tackling issues that cannot be postponed and I do not think about anything else."

Initially, Kishida had planned to hold a press conference in Mie Prefecture after visiting the Ise Jingu shrine, but he cancelled the trip after the magnitude-7.6 earthquake struck the Noto Peninsula and its vicinity on the Sea of Japan coast on Monday.

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