Senior Liberal Democratic Party lawmakers involved in a political funds scandal said Friday that former Prime Minister Shinzo Abe had proposed ending the practice of creating slush funds for members of his faction from revenue from fundraising events.

But former trade minister Yasutoshi Nishimura claimed he is not aware of why the proposal made in April 2022 was later dropped since he quit as secretary general of the Abe faction, the party's largest, afterward. Abe was fatally shot during an election campaign speech in July that year.

At a televised hearing of the House of Representatives political ethics committee, Nishimura also denied being involved in organizing the distribution of slush funds, in which a portion of the revenue faction members generated from the sale of tickets to fundraising events was passed back to them without being reported as political funds.

Former trade minister Yasutoshi Nishimura attends a televised hearing of the House of Representatives political ethics committee in Tokyo on March 1, 2024. (Kyodo)

The two-day hearings started on Thursday. On the initial day, Prime Minister Fumio Kishida, who heads the LDP, became the first incumbent premier to make an appearance at the ethics panel but provided no new facts regarding the scandal.

Friday's hearings were disrupted in the afternoon as the lower house had to deliberate a motion demanding the dismissal of the chamber's budget committee chair. He had decided to hold a session to put a draft budget for the next fiscal year from April to the vote.

Later in the day, the hearings resumed and Ryu Shionoya, the de facto leader of the Abe faction, and former LDP Diet affairs chief Tsuyoshi Takagi, who served as secretary general of the group, joined the meeting.

After the latest slush funds scandal came to light late last year, major members of the Abe faction resigned from their party or government posts.

Kishida's government is aiming for the passage of the budget in the lower house as early as possible, given that it contains funds to tackle the fallout from a New Year's Day earthquake that ravaged central Japan.

The LDP has come under intense scrutiny amid allegations that some of its factions, including the largest one formerly led by Abe, neglected to report portions of their incomes from fundraising parties and created slush funds for years.

Nishimura said he does not know when the slush fund practice began, saying faction heads and accountants of the group customarily dealt with money transactions.

The former trade minister, who was secretary general of the Abe faction between October 2021 and August 2022, said that he did not see details of the faction's transactions or its fund reports.

With the LDP suggesting the custom may have lasted for over 20 years, opposition parties have demanded that Yoshiro Mori, who served as prime minister for around a year since April 2000, be summoned to parliament as a sworn witness.

Mori was the leader of the faction between December 1998 and April 2000 and from May 2001 to October 2006, when the group is suspected to have started accumulating slush funds and reimbursing them to its members.

Abe's assassination and the death in November 2023 of former lower house speaker Hiroyuki Hosoda, who led the faction for about seven years from 2014, has made it difficult for LDP lawmakers to investigate how and when the group launched the slush funds practice.

Former Chief Cabinet Secretary Hirokazu Matsuno, who was secretary general of the biggest faction for around two years from September 2019, also appeared in front of the committee.

Matsuno argued the funds, which he said were treated as reserves at his office, were not spent for illegal or personal purposes, saying he used them for meetings with fellow lawmakers and other individuals.

A total of 10 individuals belonging to three LDP factions, such as the one Kishida led until December, have been either indicted or issued summary indictments for violating the political funds control law. The three factions have decided to disband over the scandal.

Hearings of the deliberative council on political ethics are, in principle, closed, but they can be made public when attendees agree. Of nine similar cases in the past, only one, in 1996, was completely closed, while five were open to the media.

The first lower house ethics committee convened in 15 years was originally scheduled to hold hearings from Wednesday, with Nishimura and several other lawmakers agreeing to participate. But its opening was delayed after the ruling and opposition parties clashed over whether the media would be allowed to attend its sessions.

On Wednesday, Kishida announced his intention to appear before the committee with the media in attendance, in an apparent attempt to break the impasse in negotiations to convene the council and secure the swift passage of the budget.

The ethics panel is responsible for examining the political and moral conduct of lawmakers who face allegations of wrongdoing.

The council, established in 1985, can admonish lawmakers, including by recommending they step down from their roles in the Diet or abstain from attending parliamentary sessions for a period, although no such measures have ever been taken.

Unlike sworn witnesses in the Diet, individuals will not be charged with perjury if they give false testimony.

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