Prosecutors in Japan have made their first arrest in a financial scandal that has engulfed the country’s ruling party and sparked speculation about the future of the prime minister, Fumio Kishida.
The Tokyo district public prosecutors’ office said on Sunday it had arrested Yoshitaka Ikeda, a former vice-education minister, who is suspected of failing to report cash he received from fundraising events organised through his faction in Kishida’s Liberal Democratic party [LDP].
The scandal reaches well beyond Ikeda, however. Last month, Kishida, already battling dismal approval ratings, saw his popularity slump further after LDP politicians were accused of systematically failing to report about ¥600m (£3.3m) in funds, in a possible violation of campaign and election laws.
Most of the politicians belong to the party’s biggest faction, once led by the former prime minister Shinzō Abe, who was assassinated in July 2022.
According to Japanese media reports, the money, which was not declared to tax authorities, was allegedly funnelled into slush funds.
Ikeda is suspected of not reporting extra cash he made from the sale of tickets for fundraising parties organised by the Abe faction. Between 2018 and 2022, he allegedly excluded more than ¥48m from reports issued by his political funds management organization, prosecutors said.
Ikeda’s policy secretary, Kazuhiro Kakinuma, with whom he is said to have colluded to falsify the reports, was also arrested at the weekend.
Kishida, who has been under fire for his handling of the cost-of-living crisis, described Ikeda’s arrest as “extremely regrettable,” adding that he would form a panel of experts this week to strengthen fundraising regulations.
“We must have a strong sense of crisis and make an effort to regain public trust,” Kishida told reporters on Sunday.
Prosecutors are investigating five of the six LDP factions over the unreported political funds, Japanese media said. A majority of the 99 members of the Abe faction, now known as the Seiwa policy study group, are suspected of receiving cash that was kept off the books, but Ikeda allegedly received a far bigger sum than the others, the Kyodo news agency said, citing sources.
Kishida was forced to sack four ministers belonging to the Abe faction, including his top spokesman and the trade minister, at the end of last year, but the scandal has followed him into the New Year, nine months before he faces an election for the presidency of the LDP, whose holder automatically becomes prime minister.
His approval ratings have slumped below 20% - the lowest for any Japanese prime minister for more than a decade - and speculation is growing that the scandal will trigger an internal power struggle led by LDP members who believe Kishida has become an electoral liability.
Lawmakers are each given a quota of fundraising party tickets, usually valued at ¥200,000 each. They submit the takings to their faction, and those who exceed their quota are paid back the extra amount. While the practice is not illegal, failure to report the income can lead to up to five years in prison or a maximum fine of ¥1m. MPs can be charged if they are found to have colluded with their administrative staff.
While Kishida’s future is uncertain, it is unclear if the scandal will significantly damage the LDP’s electoral prospects. The party, which has ruled almost uninterrupted since the mid-1950s, does not have to face voters in a general election until 2025, and few believe the splintered opposition will mount a serious bid for power.
