Former Political Kingmaker Faces Tax Charges in Japan

Shin Kanemaru, the fallen kingmaker who once anointed prime ministers and manipulated the ruling Liberal Democratic Party, was indicted Saturday on charges of evading $1 million in taxes on $1.7 million of concealed income.

Kanemaru, 78, faces further indictments in connection with an additional $5.1 million in concealed income, but Tokyo prosecutors filed only partial charges in order to beat Saturday’s deadline for the statute of limitations on his 1987-related activity.

If convicted, Kanemaru faces five years in prison, a $4.2-million fine and income-tax penalties.

The unraveling tax scandal involves potentially hundreds of millions in cash, gold and bonds in what officials charge was a massive abuse of public trust by one of the nation’s top politicians. Last week, television showed investigators coming from Kanemaru’s office with a safe allegedly containing some of the loot.

Although it is not yet clear where Kanemaru managed to obtain such staggering funds, authorities say at least some of the money appears to have been campaign contributions diverted in part from construction companies in his local district in Yamanashi prefecture near Mt. Fuji.

Details of where Kanemaru got his money and what he did with it--potentially explosive information that could clearly document the extent of corruption in the overall political system--are expected to be revealed as the prosecution pursues its investigation into the former kingpin’s activities in 1989, the other year specified in the arrest charges.

Already, the Japanese media have quoted prosecution sources as saying that former Prime Minister Noboru Takeshita was also listed by Japanese banks as a purchaser of the same debentures that Kanemaru allegedly bought with his hidden income.

Kanemaru reportedly has told prosecutors that he was planning to invest the money in plans to create a new political alignment. Officials, however, say they will show that much of it, in fact, went to line his own pockets.

Since his March 6 arrest, he has been held at the Tokyo Detention Center, where he is being questioned daily by prosecutors from 10 a.m. to 8 p.m. Although an attorney who saw him Tuesday said Kanemaru complained of not being able to sleep well at night, he is reported to be in relatively good health.

Kanemaru resigned from Parliament last October after being fined $1,700 for accepting $4.2 million in illegal political donations from a mob-tainted trucking company, the now-defunct Tokyo Sagawa Kyubin Co.

Also indicted Saturday was Kanemaru’s former aide, Masahisa Haibara, 49, on charges of evading $222,000 in taxes on $427,000 of unreported income.

Prime Minister Kiichi Miyazawa, after days of expressing “regret,” apologized to the nation Saturday and vowed to push through political reform. (On Friday, the ruling party decided to push a bill banning the transfers of contributions from one politician’s group to another, thereby eliminating the longstanding patronage system.)

“It is truly regrettable that public distrust for politics is worsening because of consecutive scandals,” Miyazawa said. “As the one who administers national affairs, I would like to extend my sincere apology to the public.”

The political opposition urged that witnesses be called to Parliament for questioning to clear up the scandal.