Goshi Hosono, a lawmaker once seen as a potential opposition leader, failed to initially report a 50-million-yen ($456,000) loan he received from a securities company during the Lower House election campaign last year.
The loan came to light in March during an investigation by the Securities and Exchange Surveillance Commission (SESC) into the securities company, whose directors include at least one of Hosono’s former colleagues with the Democratic Party of Japan.
The office of Hosono, now a 46-year-old independent Lower House member, said the omissions of the loan from his reports on election spending and personal assets stemmed from a misunderstanding about dates.
Documents obtained by The Asahi Shimbun related to the Tokyo-based securities company show that Hosono’s office around Oct. 13, 2017, requested the loan to support his political activities.
Although some executives opposed the idea, the company eventually extended the 50-million-yen loan on Oct. 19, three days before the Lower House election.
Loans used for election purposes must be reported under the Public Offices Election Law. Hosono’s election spending report submitted on Nov. 6, 2017, did not mention the 50 million yen.
Lawmakers are also required to release a report about their personal assets, but Hosono’s report compiled in late January claimed to have no outstanding loans.
According to sources, the SESC’s investigation into the securities company started in late January over suspicions that investors were given false explanations in the brokerage’s drive to procure funds for its parent company, a natural energy development company.
When the SESC was looking into how the parent company used the accumulated funds, it asked the securities company on March 26, 2018, about the 50 million yen provided to Hosono.
On April 4, Hosono revised his personal assets report, which had been made public two days earlier, and included the 50-million-yen loan.
Documents of the securities company show that Hosono repaid the loan in full on April 9, but a note mentions that the politician paid no interest for more than three months after the loan was made.
Moreover, documents submitted to the SESC by the securities company include statements by some executives who criticized the decision to extend the loan to Hosono.
The executives said that lending the money during the election period would likely raise questions about the use of the funds and spark suspicions of possible violations of the Public Offices Election Law.
Other comments criticized the failure to ask Hosono to provide collateral for the loan.
The energy development company acquired the securities company in May 2017 and moved the brokerage’s headquarters from Okinawa Prefecture to Tokyo.
Three directors of the securities company are former lawmakers who once belonged to the DPJ and Nippon Ishin (Japan Innovation Party).
Hosono was environment minister when the DPJ was in control of the government, and his name was often mentioned as a possible president of the party after it was dumped from power.
According to a corporate research company, the securities company had sales of about 10 million yen for the fiscal year ending in March 2017. However, it appears the company did almost no business after it was acquired by the energy development company.
Securities company officials declined to comment about the funds provided to Hosono.
In written responses to questions from The Asahi Shimbun, Hosono’s office said on June 25 that the lawmaker borrowed the money as an individual for the possibility that political funds would be needed in a hurry after autumn 2017.
Regarding the omission from the election spending report, Hosono’s office said the initial understanding was that the loan was made after the Lower House election.
After the office realized the error, revisions were made to the personal assets report, the office said.
The DPJ renamed itself the Democratic Party but continued to struggle.
Hosono left the party in August 2017 and was a key figure in Tokyo Governor Yuriko Koike’s formation of the Party of Hope.
Hosono ran in the October 2017 Lower House election under the party’s banner and won a seat in the Shizuoka No. 5 district.
However, the party as a whole fared poorly in part because of Koike’s policy of rejecting certain Democratic Party lawmakers from joining her party.
Hosono has since left the Party of Hope and is now an independent.
(This article was written by Nobuya Sawa, Tomoya Fujita and Jun Miura.)