Thursday, March 05, 2009

Ozawa’s Troubles Bigger than I Suspected

Media reports today suggest that Ozawa is in deeper trouble than I had suspected. An arrangement that funneled Nishimatsu money to the Ozawa camp reportedly began in 1995, when Ozawa was wresting control of the New Frontier Party, the first credible threat to the LDP since the latter’s founding in 1955, from his intra-party rivals. The arrangement called for 25 million yen annually, with some of the money going to Ozawa’s financial management organization, and the rest of it going to the Iwate Prefecture 4th District chapter—Ozawa’s electoral district and Iwate Prefecture chapter association of the New Frontier Party and now the DPJ. In the beginning, at least some of the money came directly from Nishimatsu Construction and its real estate subsidiary but later increasingly, after 2003 exclusively, funneled through two Nishimatsu dummy organizations. The money going to the Ozawa organization allegedly violates both the letter and the spirit of the law, which since 1999 has banned financial management organizations—think, PAC on steroids—through which all political funds to individual politicians must flow, from accepting political from accepting corporate money.

What’s relevant against this timeline is the fact that the top publicly-funded secretary who was arrested joined the Ozawa office in 1999 as a private secretary after losing a mayoral election. Thus, he could not have been involved in making the initial arrangements with Nishimatsu in 1995, nor the beginning of the shift to the two Nishimatsu dummies in 1995 and 1998. It is also unlikely that he had any significant role in making arrangements to circumvent the ban that came into force in 1999. In other words, someone other than the secretary was responsible for setting up the initial arrangement and most likely the alterations to camouflage the corporate source after the ban. The secretary merely walked into a situation that he subsequently was promoted to oversee and has been left holding the bag. Moreover, given the scope of the arrangement that covered the entire Iwate Prefecture and the initial legality of corporate contributions, it is hard to believe that Ozawa had not taken an active interest in the 1995 setup for Nishimatsu money, though it is also quite possible that he subsequently used his political machine to shield himself with a don’t ask, don’t tell information barrier.

The PPO cannot go back beyond the 2003 contributions as part of the accusations; the statute of limitations on criminal prosecution expires at the end of this month on the 7 million (received in 2003) out of the 21 million yen that Ozawa’s financial management organization received between2003-2008 and this has been given as the reason for the timing of the arrest. However, my guess is that the Criminal Procedure Code does allow the introduction of pre-March 2003 facts and evidence to support the case against the post-2003 infractions. The court of public opinion, of course, does not follow the Criminal Code, and will hear the case with Ichiro Ozawa as the main, albeit unindicted, suspect against a background of the entire 1995 arrangement, multiple allegations of political finance irregularities, and the graveyard shadow of the Fuligin General himself.

The next chapter of this saga is likely to come rather quickly, as the PPO must indict the secretary by the end of the month, or the statute of limitations expires on the 2003 money. An indictment will ratchet up the political pressure. Of course it’s still possible that Ozawa will be able to muster enough support within the DPJ to hang on—any threat that he might pull his troops out must be taken seriously in view of past experience and DPJ leaders are voicing their support in public—but that looks less likely as the full scope of the case unfolds. His rock-bed, diehard supporters are substantial but clearly in the minority, and the others should have no compunctions in taking him out if they see the damage outweighing the desire for party unity.

The electoral implications are more ambiguous. My money had already been on Katsuya Okada, ex-party leader once removed, as the most likely DPJ alternative if Ozawa resigns. He looks more and more the favorite, as a middle-of-the-road reformist without Ozawa’s money baggage—it’s easier to keep your nose clean when your father is a self-made billionaire—or enemies—the flip side is that backroom wheeling and dealing is not Okada’s forte—who has been tirelessly making the rounds of the boondocks since he resigned as party head after the 2006 Lower House election loss, while quietly voicing his loyal dissent as he sees fit. His wooden campaign style—think, Al Gore, without the bombast—is no help, but Ozawa is no Obama either. In any case, Ozawa’s travails improves the chances of Taro Aso making it to a snap election, even more so if Ozawa defies the odds and stays on. The media (and electorate) would no doubt prefer a Yosano-Okada matchup, but I’ll be surprised if both cards turn up.

Yes, I think that in the beginning I underestimated Ozawa’s problem. I may have a bias in favor of the status quo. I’ll have to think about that.

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