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The old and the new in Japan’s latest money politics scandal

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In Brief

There is something old and something new about Ozawa, his secretary Okubo and the latest money politics scandal in Japan.

First, the old: this scandal shows:

● how Japanese Diet politicians continue to sub-contract out the task of raising political funds to their secretaries who became the primary target if a scandal ensues. The secretaries are still playing the traditional role of ‘fixers’ and ‘filters’ – 'fixing the big money deals while filtering the activities so that ‘while money flows through the door, the boss never has to swim in it'*;

● that Opposition party Diet members are not immune from being caught up in money politics and bribery scandals. Indeed, many Opposition party Diet members have been implicated and indicted in corruption bribery scandals before. In perhaps the most famous money politics episode in Japan’s postwar history, one that rocked just about Japan’s entire political world (the Recruit scandal of the late 1980s), prominent members of the Komeito, DSP and JSP all received Recruit Cosmos shares and several resigned their seats. Komeito Party Diet member Katsuya Ikeda was one of the few who actually ended up getting caught and indicted. There are many other old and new examples of Opposition party Diet members being exposed for corruption;


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● that the monies and other benefits steered by companies into the political world in search of specific policy favours (including public works contracts) are channelled to individual politicians (and bureaucrats), not to political parties. This kind of political corruption is very much linked to the role of individual politicians as interest mediators and business brokers (it is quintessential clientelism, as opposed to sectionalism and localism, other kinds of special interests of high prominence in Japanese politics);

● the old adage that a public prosecutor should not bring too much ‘chaos’ to national politics. In spite of Ozawa (and others) hinting at a conspiracy behind the timing of his secretary Takanori Okubo’s arrest, in fact, the Special Investigation Department of the Tokyo District Public Prosecutors Office was all too aware of the potential political consequences of their action, conscious of the fact that if they let matters go much longer, they would have to arrest Okubo much closer to the next general election (to the DPJ’s great detriment);

● that politicians can almost always rely on the fact that there will be insufficient evidence for an indictment and subsequent conviction to be successful. In the meantime, denial is the best defence because prosecutors invariably rely on confessions as their main source of evidence. Both Ozawa and Okubo strongly deny any wrongdoing;

● that being tarnished by money politics is no barrier to political survival. It looks as if Ozawa will stay on as DPJ leader, and unless the PPO can get the dope on him, there’s little chance they could actually charge him with anything;

● that it is possible to make political capital out of scandal by converting the issue into calls for political reform (e.g. Miyazawa in the Recruit scandal). Ozawa has proposed that all donations from companies and organisations to political parties should be banned, knowing full well that this has little chance of succeeding with the LDP and his own party still relying on business and its offshoot organisations as their main bank-rollers;

● that the public works industry funded by the national and local government budgets remains the most reliable source of ‘money in exchange for favours’ for Diet politicians, thus representing an additional source of public funding for politicians.

Now for the new: the Ozawa-Okubo-Nishimatsu scandal shows how:

● Opposition politicians can still exercise influence over the allocation of public works contracts – presumably not by pressuring central government bureaucrats/semi-administrative agencies because they are not in government – but by pro-actively organising big-rigging amongst contractors (i.e. by coming in through the business end of the deal and prearranging winners of contracts for public works projects), something that companies usually organise all by themselves and which is usual sense in which dango is understood. Full marks for ingenuity, particularly when you’re out of power. Of course, as the most prominent politician from Iwate, Ozawa has continued to exercise a great deal of clout over local government in Iwate and even in Tohoku more broadly, and these local governments let out public works contracts too.

● that the primary figure in this kind of bid-rigging can be the secretary himself (e.g. Okubo), so the bigwig can remain at arms length (NB first point above).The Ozawa scandal illustrates once more how, after more than a decade of reform, the underlying realities of Japanese politics remain the same.

* See p. 105 of William Nester’s wonderful article in The Washington Quarterly in April 1990.

6 responses to “The old and the new in Japan’s latest money politics scandal”

  1. * See p. 105 of William Nester’s wonderful article in The Washington Quarterly in April 1990.

    I think you mean The Third World Quarterly.

  2. It appears that veteran politician and DPJ President, Mr Ichiro Ozawa, will stay on as Party leader, until at least such time as overwhelming public disapproval forces him to resign. Mr Ozawa is engaged in a delicate “balancing act” – weighing up his campaigning skills to be used in the next general election as against possible loss of voter support should he stay on as DPJ President. It will most probably take a large negative swing in voter opinion to force Mr Ozawa to quit, thereby abandoning his last chance to become Prime Minister of Japan and to bring about a truly competitive two-party system in Japan. Japanese voters are accustomed to political scandals involving money. The DPJ, though, has lost much of its carefully-crafted image of being free from corruption. Mr Ozawa may yet have to stand down, in order for the Party to regain its “clean” public persona.

  3. In response to Simon’s comment:

    My photocopied version of Nester’s article had ‘TWQ’ written on the top of it. I assumed this meant ‘The Washington Quarterly’. Thank you for the correction. To be honest, I thought it was rather detailed and in-depth for ‘The Washington Quarterly’ which prefers more general think-pieces.

    In response to Michael Vaughan’s comment:

    I would just say that Japanese voters have already had to forget a lot of money politics-related scandal when it comes to Ozawa. He has projected an image of being a reformer rather than ‘Mr Clean’. He was truly a scion of the Tanaka-Kanemaru generation of LDP politicians, and we all know how corruption scandals brought down both of these men. Ozawa’s reputation as a reformer goes back a long way: e.g. his proposal for Japan to switch from ‘passive’ to ‘active pacifism’ was first made in 1992 when he was head of the LDP’s Special Commission Concerning the Role of Japan in Global Society Until the last few days at least, these reforms did not include any proposals for revamping the Political Funds Control Law and thus tightening the major regulations concerning political funding (to the best of my knowledge).

  4. An article just published by Shukan Gendai is rich in hitherto unknown details about this latest money politics scandal to beset Ozawa. Several points stand out: first, the money channelled to Ozawa from construction companies eager to obtain PW contracts in Iwate/Tohoku was likened by one company executive to ‘protection money’ paid to yakuza – namely to avoid Ozawa using his influence to obstruct their bids rather than exercising his good offices to help them win contracts). The executive in question likened the payments to an ‘insurance premium’. Second, the company donations flowed through all possible organisational routes to Ozawa – through the No. 4 DPJ constituency office in Iwate (legitimate because it’s legal for companies to donate to political parties); to Ozawa’s political fund management organisation (illegal – the reason why Okubo was arrested and charged); and through the purchase of party tickets (also legal). Third, Ozawa’s political reform proposal made in the wake of this scandal (all contributions from companies and organisations to political parties should be banned) is the same tactic he used to ‘cleanse’ himself after the Kanemaru – Sagawa Kyubin scandal in 1992, when he called for public subsidies for political parties (subsequently introduced as part of the 1994 electoral reform laws).

  5. Dr. Mulgan –

    How could Ozawa use his influence to obstruct construction company bids? He would have to have control over the careers of the bureaucrats who made the final decisions.
    The only time Ozawa might have had such an influence would have been during the days of the LDP-New Komeito-Liberal Party coalition government.

    With the transmission mechanism is missing, I would take the claims of executives culled from Shukan Gendai cum granum salis.

    Furthermore, why pay to play in Iwate? As an opposition stronghold, one could scarcely imagine an LDP-dominated government wishing to shower Iwate’s citizens with public works contracts. The LDP is lumbering but it is not blockheaded.

  6. Michael’s comment begs the question why such large sums were donated to Ozawa by companies involved in PWs in Iwate and Akita in the first place. If not to buy Ozawa’s influence (either positive or negative), then what were these donations for? Presumably the millions of ¥¥¥ channelled through Ozawa’s political organisations and the DPJ No. 4 constitutency organisation were not just a downpayment on the possibility of Ozawa/the DPJ coming to power. The companies involved have been named, the PWs projects have been named (in both Iwate and Akita), and the specific contracts that these companies were awarded have been named – despite the fact that three out of the four Lower House Diet members representing Iwate are from the DPJ. PWs-linked political donations are always for specific favours on specific projects. The details of this latest scandal confirm that this was also a case of money for favours. The companies identified as the winners of the contracts were the ones that donated funds to Ozawa. This is not to say that they did not also donate to other politicians in the LDP (they did).

    The really intriguing questions in relation to this latest scandal have always been: what favours? And, what were the mechanisms involved? The last is the hardest to answer. The only information that appears to be publicly available is that i) Okubo acted as a key link person pre-arranging successful bids for contracts amongst donating companies (i.e. bid-rigging); and ii) Ozawa was paid not to act against particular company’s bids (as revealed in yesterday’s posting). There is no reason to suspect that the company executives who spilled these beans were lying. They make sense of the whole mess and the kind of influence that Ozawa might exert. True, they assume that Ozawa still exercises this influence over the allocation of contracts in Iwate/Akita – either through the central government ministries and/or through local governments. But neither is hard to believe given his long career inside and outside the LDP, the fact that he learned his money-gathering skills from Tanaka and Kanemaru, and the fact that he remains a hugely influential member of the Japanese Diet with connections and historical ties that stretch all the way down from the national government to the prefectural and municipal levels and to construction companies of all shapes and sizes involved in the Tohoku PWs industry. There is probably (to use Pol.Sc. jargon) a lot of ‘path-dependency’ in the behaviours of all involved.

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