Japan Press Weekly

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2015 December 16 - 22 [POLITICS]

Major banks decide to resume donations to LDP after 18 years of restraint

Japan’s major banks will return to the donor list of the ruling Liberal Democratic Party for the first time in 18 years, Akahata reported on December 18. These banks have refrained from making political donations since receiving government bailout money in the late 1990s.

Mizuho Financial Group, one of the three mega banks in Japan, at its board meeting on the day is expected to decide to give a political contribution of 20 million yen to the LDP political fund management organization, reported Akahata. The two others, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are believed to soon follow suit.

The banking industry used to be a generous contributor to the LDP. Back in 1997, ten major commercial banks provided to the conservative party a total of 185 million yen, almost the same amount in donations made by the Japan Electric Manufacturers’ Association and the Japan Iron and Steel Federation combined.

Amid the financial crisis in the late 1990s, Japan’s financial institutions were bailed out and given a huge amount of taxpayers’ money in order to write off their bad loans so they stopped making political donations in 1998. Although the three major banks in 2006 finished paying back the bailout money they had received, they have refrained from making donations.

After an interlude of 18 years, Mizuho will restart activities as a political contributor. However, this is not a surprise given that the Japan Business Federation in October encouraged its member companies to consider making political donations. Resona Holdings, the fourth largest bank after the three majors, also completed its repayment in June this year.

In the first place, corporate political donations bias the process of policy making and it will be even more problematic if done by banks which are supposed to have a degree of public accountability. Furthermore, the above-mentioned four banks have lent the LDP more than seven billion yen, which has already received criticism pointing out that the bank’s donations will in effect cancel part of the debt.

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Japanese Communist Party Policy Commission Chair Koike Akira on December 18 at a press conference criticized Mizuho’s decision to resume political donations as a naked act of buying political influence.

Koike pointed out that mega banks including Mizuho lent a total of seven billion yen to the LDP without requiring security. He stressed that in addition to this preferential treatment, the banks are considering offering political donations to the ruling party and that this is nothing but a corruptive and collusive relationship between politicians and banks.

He went on to say that the LDP is again clearly revealing its money-driven nature which once it tried to hide from the public. It is becoming obvious that the Abe government prioritizes the interests of large corporations and major banks, Koike pointed out.