Ozawa Ichiro on Trial

The Ozawa Ichiro ‘phenomenon’ has returned to haunt Japanese politics. Although Prime Minister Noda Yoshihiko carefully chose his Cabinet team by picking two members of the group led by former DPJ chief Ozawa with the apparent intention of fostering reconciliation between rival groups, harmony is yet to be restored. It was a clever move by Noda to put an end to the “troika” DPJ leadership of Ozawa, Hatoyama Yukio and Kan Naoto.

However, even before Ozawa could play his political card in the Noda administration, three of his former aides were found guilty. On September 26, 2011, the Tokyo Court handed suspended sentences to Tomohiro Ishikawa, Takanori Okubo and Mitsutomo Ikeda for falsifying financial reports of Rikuzankai, Ozawa’s political fund management organization. As per the court ruling, the three aides of Ozawa falsified Rikuzankai’s financial reports in 2004, 2005 and 2007, concerning a land purchase in Tokyo’s Setagaya Ward.

As per the ruling, Ishikawa and Okubo received and concealed a 100 million yen in slush funds from midsize contractor Mizutani Construction Co. over the Isawa dam project in Iwate Prefecture, Ozawa’s constituency. Two of Ozawa’s three secretaries also allegedly received 50 million yen in October 2004 and another 50 million yen in April 2005. The ruling also said that Ozawa’s office wielded a decisive influence in picking a winning contractor through bid rigging for public works projects in Iwate and Akita prefectures and gathered political funds from contractors. Ozawa and his allies were expecting not-guilty verdicts for the three former aides and the court verdict was therefore devastating.

The Japan Times was cautious in commenting on the court ruling in its editorial. It observed: “If the decision is correct, it is a serious case of a politician receiving money under the table. But oddly enough, the prosecution did not indict anyone in connection with the Mizutani money. Clearly the prosecution was not confident enough about the evidence it collected. One also wonders whether the court fully examined the evidence. For example, a Mizutani driver’s daily log has no entry that shows that he took the president to a hotel where he allegedly handed 50 million yen to one of the secretaries on the day mentioned by the prosecution.” It further observed: “The ruling used many phrases and presumption. It is hoped that an appellate court will strictly assess concrete evidence and give a convincing ruling, regardless of its conclusion.”

After the verdict was announced, opposition lawmakers demanded at a Lower House Budget Committee meeting that Ozawa step down as Lower House member. Opposition parties also demanded that Ozawa should appear before the Diet as a sworn witness to explain the scandal, though DPJ Secretary General Azuma Koshiishi announced that the party had no plans to summon Ozawa to testify.

This has deepened public distrust of politics. The ruling that a middle-ranking general contractor offered dubious money to the Ozawa camp is a sharp rebuke for the money-driven politics of the political bigwig. Ozawa should be held strictly accountable for the case. The convictions of his three aides for making false entries on his political funds records will inevitably impact Ozawa’s own trial that started on October 6 and will continue for several months. His clout within the DPJ will be considerably undermined.

Legal experts criticized the verdict and supported the argument made by the aides during trial that the case was a minor one and that the circumstantial evidence they were based on was not enough to prove beyond reasonable doubt that at least Okubo, whose alleged involvement was based only on botched interrogation records, had conspired with the other defendants to cook the books. However, while the issue of his criminal liability should be determined through Ozawa’s own trial, he cannot escape political responsibility for the funding scandal. This is because ever since the scandal came to light, Ozawa’s explanations to the public’s questions have not been convincing and he has invented convenient excuses for ducking his responsibility.

The leading newspaper in Japan, Asahi Shimbun, criticized Ozawa after the scandal surfaced and urged him to retire from politics so that Japan can bid farewell to his old-fashioned politics. During Ozawa’s own trial, which started on October 6, the court is likely to follow the same logic – lack of evidence argument – as occurred in the case of his aides. Ozawa’s trial will focus on whether he conspired with the three former secretaries to falsify the reports. Ever since his indictment in January 2011, Ozawa has denied any wrongdoing. He may take solace that the guilty verdict handed to his former secretaries may not work against him as different judges will try him. No doubt, the ruling of September 28 is a strong blow to Ozawa and the opposition is fiercely attacking him. But it should be remembered that the conviction of his secretaries does not automatically mean that he is guilty, although the ruling of 26 September can negatively affect his own trial.

It is likely, however, that the ruling on the aides is enough to weaken Ozawa’s influence within the DPJ even before the outcome of his trial. Notwithstanding the verdict on him, Ozawa is not likely to be appointed to an executive post. On the contrary his power base will be considerably eroded as he will lose some of his loyalists. In a faction-ridden political system, Ozawa heads the DPJ’s largest faction, which has some 120 members. But after his indictment, then Prime Minister Kan Naoto suspended his party membership in February 2011. This deepened the internal conflicts between Ozawa’s followers and his foes within the DPJ.

Noda’s strategy of reconciliation and reuniting the party led him to include two Ozawa allies – Kenji Yamaoka and Azuma Koshiishi – as ministers and party executives. The opposition has been pressing that Ozawa be summoned to the Diet to give testimony under oath about the scandal. Shigeru Ishiba, a lawmaker from the main opposition Liberal Democratic Party, demanded that Ozawa give sworn testimony before the Diet. While responding to the demand, Prime Minister Noda told the Lower House Budget Committee that “due consideration” is needed because if Ozawa is summoned, it could possibly affect the course of his trial. Also, Noda reiterated that as head of the administrative branch, he will “refrain from commenting on judicial decisions”. Other Cabinet colleagues got the hint and made no further comments on the court ruling about Ozawa’s aides. DPJ General Secretary Koshiishi has been calling for Ozawa’s party membership to be reinstated. However, political analyst Hirotada Asakawa believes that “executives won’t be able to do so until his trial is over in April” since three former secretaries have been convicted.

The next DPJ presidential election is due in September 2012 and Ozawa was believed to be planning to run but that scenario is now difficult to realize under the circumstances. What is likely to happen in the coming months is that Ozawa’s faction will begin to splinter because their leader lacks party executive status and hence will not be able to tap the DPJ’s funds.

The Noda administration is just over a month old and the opposition is already on its neck. LDP President Sadakazu Tanigaki told the LDP executive board meting that his party “will press the administration about this issue and drive them into a corner”. The LDP is putting pressure on Noda and has demanded intensive deliberations that will tackle the issue of money-tainted politics.

The ruling underscored the significance of ensuring transparency in fund raising by political parties. The court ruled that the three ex-aides “conspired to cook the brooks and failed to provide clear explanations about the origins of the funds”. Though Ozawa is going to contest the charges against him, his responsibility as a politician to supervise his secretaries is a separate matter that needs to be clarified. On both counts, Ozawa is cornered. The duration of Noda’s continuance in office will be influenced by how the court rules on Ozawa and how Noda deals with Ozawa and his faction members.

Nevertheless, it would be premature to write off Ozawa as a spent force. Noda’s appointment of Ozawa allies in his Cabinet and party posts attests to that. Ozawa’s mastery of backroom deals has earned him the nicknames of ‘Prince of Darkness’ and ‘Shadow Shogun’ and he lives true to these images even in difficult times. With 120 members belonging to his faction, Ozawa still wields decisive influence to make or unmake the government led by the DPJ. The Ozawa phenomenon will continue to remain a factor in Japanese politics for some time.