'Money politics' brings minister to account: Row over approach to Japan's big banks

JAPAN'S Finance Minister, Yoshiro Hayashi, had a funny old day yesterday.

On the one hand he was busy denying that he had done anything improper by soliciting money - reportedly more than pounds 600,000 - last week from banks and insurance companies to splurge on his election campaign. But shortly afterwards he had to put on another hat and give a press conference saying government spending had to be cut severely because of lower than expected tax revenues.

If this man were not the top economic official of the world's second largest economy, the story would be just a little footnote to the daily dealings of banana-republic administrators, lining their own pockets as their countries lurch further into debt. But Mr Hayashi presides over an economy worth more than dollars 3,000bn ( pounds 1,987bn) so what he says has to be listened to carefully.

And people were listening, since the issue of kinken seiji, or money politics, has loomed large in Japan of late. It is one of the main reasons why the government fell two weeks ago and elections had to be called.

Mr Hayashi's embarrassment began on Thursday. A number of banks and life insurance companies, apparently outraged at requests for political funds from the Finance Minister, arranged for information of Mr Hayashi's soliciting to be leaked to the press. The total sum was said to be 100m yen ( pounds 606,000).

When confronted with the story, Mr Hayashi said there was nothing irregular in him seeking political donations from the very institutions he is meant to supervise as minister. He denied he wanted a total of Y100m, although he refused to say how much he had asked for. Nor was it true, Mr Hayashi said, that he had suggested the banks could conceal their donations by paying inflated prices for advertisements in the newsletter of the ruling Liberal Democratic Party (LDP).

And how could journalists possibly impugn his integrity as Finance Minister? 'I am unhappy that an issue has been made of my request because I did not use my position as cabinet minister in soliciting donations,' he told the daily Asahi newspaper.

After dealing with the political funding issue, the 'unhappy' Mr Hayashi then put on a serious face and walked into a press conference in his ministry. With not a trace of irony, he outlined the Finance Ministry's calculation of a pounds 19bn tax revenue shortfall for last year.

The government's coffers are 'in a very serious condition', Mr Hayashi said. His ministry would be reviewing all government spending in 'an austere manner', and anything that was not absolutely necessary would be pruned without compunction. To conclude his speech on austerity and fiscal rectitude, he repeated that he was adamantly opposed to the issuance of deficit-financing bonds.

He did not mention that the LDP as a whole has just reached an agreement to go into debt to the tune of Y10bn with a group of banks to finance its election campaign. It's a funny business, politics.