Japan Slush Fund Probe Implicates Premier’s Faction, NHK Says

(Bloomberg) -- Japanese Prime Minister Fumio Kishida’s faction within the ruling Liberal Democratic Party is suspected of having concealed funds, NHK said, potentially derailing his battle to contain the fallout from a party-wide scandal over political finances.

Most Read from Bloomberg

• JPMorgan Is in a Fight Over Its Client’s Lost $50 Million Fortune

• Goldman Trader Paid $100 Million Since 2020 Is Stepping Down

• Raimondo Vows ‘Strongest Possible’ Action on Huawei’s Chip Breakthrough

• Netflix Posts Viewer Data on Every Show, Film for First Time

• Traders Betting Fed Peak Is Here Curb Pivot Wagers: Markets Wrap

His group is thought to have under-reported money raised, the report from the national public broadcaster said Tuesday, citing unidentified sources close to the matter. As Kishida tries to clamp down on lawmakers accused of accumulating slush funds, the Asahi newspaper the previous day said he planned to fire all ministers and party officials from a rival faction suspected of failing to properly declare income from fundraising events.

Support for the embattled prime minister tumbled by 6 percentage points on the previous month to 23% in a survey published by NHK late Monday, by far the lowest since the LDP returned to government 11 years ago after a period in opposition.

Read: Political Shakeup May Smooth BOJ Rate Hike Path, Economists Say

Anger over the scandal also triggered an unusual slump in support for the long-ruling party, yet public approval for its rivals is in single figures, meaning it is unlikely the LDP would lose power. The party could, however, opt to replace Kishida when his term as party leader ends in September, or before.

“It’s possible he could resign after passing the budget,” LDP lawmaker Shigeru Ishiba told the BS Fuji TV network, referring to the end of the annual parliamentary process, which generally comes in late March.

Ishiba also criticized the reported plans to purge the government of members of the faction formerly headed by the late Prime Minister Shinzo Abe, which is the largest in the party.

“Why just the Abe faction?” he said late Monday. “What happens if suspicions emerge about other factions — that would be the end of the LDP administration.”

Party Secretary General Toshimitsu Motegi told reporters it was “not necessarily correct” to say all Abe faction members would be ousted.

Read: Japan’s Kishida to Fire More Officials in Scandal, Media Say

A former defense minister, Ishiba has several times run unsuccessfully for leadership of the LDP and is currently one of the public’s most-favored choices to take over as premier. Others include Minister for Digital Transformation Taro Kono and former Environment Minister Shinjiro Koizumi.

Kishida is expected to give a news conference Wednesday to mark the end of the parliamentary session. He is set to replace four of his ministers as soon as Thursday, Kyodo News said, citing a government official it didn’t identify.

The turmoil already risks affecting foreign policy, with Kishida considering dropping next month’s planned trip to Brazil and Chile, the Mainichi newspaper said.

The cabinet members to be replaced are all members of the Abe faction and include Chief Cabinet Secretary Hirokazu Matsuno and trade minister Yasutoshi Nishimura, according to multiple media reports.

Most Read from Bloomberg Businessweek

• SBF’s Lawyer Says His Client Was the ‘Worst’ Ever Under Cross Examination

• Rate-Cut Pivot Can’t Come Soon Enough for Debt-Strapped Companies

• How the Biggest Boutique Fitness Company Turned Suburban Moms Into Bankrupt Franchisees

• Hottest Job in US Pays $80,000 a Year, No College Degree Needed

• What It’s Like Working in a Building Shaped Like a Hot Dog

©2023 Bloomberg L.P.