Politics and money in Japan: Legalize transparent lobbying to reflect public will!

Hirokazu Kobayashi

CEO, Green Insight Japan, Inc.

Professor Emeritus and Visiting Professor, University of Shizuoka

The Takaichi Cabinet in Japan, launched in October, has been well received for its diplomatic skills and economic policies, currently achieving a 75% approval rating—the second-highest in history. However, the reality of "corporate group donations," which were criticized by the Constitutional Democratic Party, Komeito, the Japanese Communist Party, and the Social Democratic Party, remains obscure to the public. Donations from corporations to the Liberal Democratic Party (LDP) and other parties, as well as contributions from labor unions or religious groups to the Constitutional Democratic Party and other parties, are both regulated under the Political Funds Control Act. Yet, the prevailing discourse paints "corporate donations" as evil and "donations from labor unions and other groups" as good. Shouldn't this value judgment be questioned? I believe the two differ only in their bases of support; no inherent judgment of good or evil can be applied.

Historically, collective living has been advantageous for human survival, naturally giving rise to leaders. This evolved into the politics of modern democratic societies. In collective societies, the division of labor occurs, and leaders are supported by their followers. In modern democratic societies, citizens support politicians who embody the culture they desire. Political donations are one way to do so.

However, improper political funding has become a historical scandal. Legislative reforms and revisions followed in their wake to correct such misconduct. Historical facts can be organized as follows (source: ChatGPT 5.1):

1980s–1990s: Major scandals → Broad institutional reforms

Symbolic cases like Recruit and Sagawa Express

1994: Political Reform (changes to corporate donation rules, electoral system reforms, and introduction of party subsidies)

Late 1990s–2000s: Loopholes and operational issues → "Minor adjustments" to enhance transparency

Fund management organizations and office expense issues. Amendments around 1999 and 2007 added restrictions on recipients and made receipt attachments mandatory.

2010s: The structural framework was maintained while individual scandals continued.

Major incidents, such as those involving Mr. Ozawa, occurred; however, no "fundamental system change" materialized, and the structure of political parties, corporate and organizational donations, and party revenues persisted.

2023–2024: The faction-party slush-fund scandal sparked a renewed push for system reform.

"Party income, kickbacks, and non-disclosure" — the "second generation of money-power issues."

2024–2025: The amendments represent the "second round" of reforms since 1994. However, they fall short of implementing a total ban on corporate and organizational donations or ensuring full transparency in lobbying activities.

These legal amendments aim to establish upper limits on political donations and ensure transparency in their use. Currently, political organizations must submit and publicly disclose "Political Funds Income and Expenditure Reports" detailing their annual income and expenditures based on the Political Funds Control Act. For political groups affiliated with Diet members, donations exceeding ¥50,000 (US$323) and spending exceeding ¥10,000 (US$65) must be recorded and submitted. These reports are stored in databases and publicly available on multiple websites.

How can public opinion be reflected healthily in politics? "Elections," "political donations," and "lobbying (petitioning) activities" serve this purpose (see figure). In the United States, the Lobbying Disclosure Act of 1995 and the Honest Leadership and Open Government Act of 2007 require individuals or entities that conduct large-scale lobbying to register. Registration requires disclosure of who is lobbying, for which client, and on what issue. It includes details on connections to political contributions made by lobbyists themselves or by political action committees (PACs), as well as detailed disclosure obligations, such as periodic reporting requirements. In contrast, the European Union (EU) operates a "Transparency Register" for the European Parliament and European Commission. This register requires registered organizations to disclose their areas of activity, budget size, and the legislation they engage with. As a result, registration has become a prerequisite for meeting with legislators or officials. These systems are based on the concept that "lobbying equals legitimate information provision and interest representation," which is controlled by transparency rules to prevent excessive influence. Japan has not dedicated a "lobbying law." According to a 2024 OECD report, Japan ranks among the lowest among OECD countries in indicators related to lobbying transparency and conflict-of-interest prevention. While there are fragmented systems in place, such as the disclosure of donations and party revenues under the Political Funds Control Act and the National Public Service Ethics Act's partial restrictions on contacts and gifts, there is no systematic lobbyist registration system that transparently reveals "who is lobbying which politicians or bureaucrats regarding which bills or policies."

Figure: Three means of reflecting public opinion in politics

Why has Japan been unable to fully implement a lobbying system? First, for a long time after the war, policy formation occurred within a closed network of bureaucrats (ministries and agencies), industry groups, and the ruling party (mainly LDP factions). Second, interest coordination is justified through the "advisory council system." Specifically, a system has been developed in which industry and labor union representatives, experts, and others are formally consulted by government advisory councils and research groups. (3) The public perception that "lobbying = evil." While the Japanese term for lobbying translates as "petitioning," it carries strong negative connotations of backroom politics, influence peddling, and nepotism. (4) The "transparency risk" for the ruling party. Introducing a lobby registration system would allow one to easily see which companies frequently contact which lawmakers and government agencies regarding which bills. As the ruling party, they do not welcome this. However, the Takaichi administration, free from the constraints of past practices, is expected to legislate highly transparent lobbying activities that better reflect public opinion.