Japan's Business to End Political Funding

JAPAN'S largest business federation is to halt all cash gifts to politicians and their parties and will advise member corporations to follow suit, a spokesman said Monday.

The move by the powerful Federation of Economic Organizations (Keidanren) marks a significant change in relations between big business and government.

"Although it's not official yet, it is the new policy line we expect to be adopted soon," said a Keidanren public affairs official.

The decision, to be ratified at a meeting of federation leaders in early September, will be another blow to the conservative Liberal Democratic Party, which is still reeling from the loss of its 38-year grip on power to a multi-party coalition in July elections. The loss was blamed on the LDP's links to numerous funding scandals.

The policy points to changing priorities, as business leaders are no longer able to justify one-sided support for the LDP as the only defender of democracy and free enterprise. Business seems to be bowing to public opinion, increasingly critical of the links between companies and politicians that have brought a string of corruption scams.

The latest scandal, which felled LDP vice-president Shin Kanemaru and helped trigger the party's fall, involved secret donations by construction firms to LDP lawmakers and regional leaders in return for public works contracts.

Political scientist Masaya Fukuoka warns that the new policy could fuel illegal fundraising by desperate politicians unless the new government moves quickly to enact tough new funding laws.

Most of the economic federation's political contributions have gone to LDP coffers, representing one third of the party's annual haul of over $290 million. But business sources and the Japanese media say that overall corporate donations - legal and illegal - to the LDP and individual party members are ten times higher.