The Cabinet of Prime Minister Yoshiro Mori tried to cool off a political hot potato on Friday when it came to light that the chairman of the Financial Reconstruction Commission (FRC) had received some 66 million yen in "advisory fees" from a major bank.
The cozy ties of the FRC chairman, Kimitaka Kuze, 71, of the ruling Liberal Democratic Party (LDP), with the Mitsubishi Trust & Banking Corp. are controversial because the FRC supervises the nation's banking industry.
Kuze, a member of the House of Councillors, denied treating the bank favorably and refused to resign. Opposition parties, however, demanded that he quit.
"[The tie with Mitsubishi] is not at all related to my position as the top official of the FRC. As chairman, I'm ready to fulfill my professional duties," Kuze said.
Another issue in question is the fact that Mori and other LDP kingpins knew of Kuze's taking money from Mitsubishi Trust even before Mori named him to chair the FRC in his second Cabinet on July 4.
When asked about Kuze's acceptance of the advisory fees, Mori admitted that he appointed Kuze as FRC chairman even though he knew of the dubious affair.
"I was informed of the issue before forming my second Cabinet," Mori told reporters. "We found no problems with him."
Kuze allegedly received advisory fees from Mitsubishi Trust for some 12 years until 1996, and an affiliate of the bank paid the rent for an office he used from 1989 to 1994 - saving him huge rental fees. The bank reportedly also assigned personnel to run the office.
Under the law governing political funds and donations, politicians must report to authorities when they use offices and employ personnel at the expense of businesses - but Kuze's reports failed to mention the use of the office.
As such Kuze is suspected of having violated the law but the statute of limitations has already run out for any crime over the use of the office.
The FRC chairman defended both his taking the advisory fees from Mitsubishi Trust and the use of the office located in Tokyo's Chiyoda-ku, near the Diet building.
"I became the advisor and used the office at the request of the bank. All of this was water under the bridge," said Kuze. "I assumed the post of the FRC chairman as Chief Cabinet Secretary Hidenao Nakagawa said he found no problem [in the tie with the bank]."
Asked about the use of the office, Kuze said, "At that time, other Diet members did the same." He stopped using the office because he said politicians' ties with businesses were called into question at that time.
Mitsubishi Trust officials admitted that Kuze assumed the post of advisor at the company's request in 1983. They said the bank wanted to invite an expert on local administration, so they opted for Kuze, a former bureaucrat of the Home Affairs Ministry that governs the nation's local politics.
"Kuze was our advisor from December 1983 to February 1996. We invited him because we believed his professional knowledge would be helpful in trust banking operations," a Mitsubishi Trust official said, adding that the bank's ties with Kuze were nothing illegal.
Sources close to the bank said even after Kuze quit the advisor's post, the bank apparently kept buying tickets for his fund-raising parties.
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