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Editorial: Japan gov't must investigate politicians' influence on public lender

It has come to light that the government-backed Japan Finance Corp. (JFC) gave "special treatment" to loan applications mediated by politicians and their secretaries for the special loans offered as part of coronavirus countermeasures.

    The trial of Kiyohiko Toyama, a former lawmaker for junior ruling coalition party Komeito, has begun over accusations his involvement in the loans violated the Money Lending Business Act. He has admitted to the charges that he facilitated loans despite not being a registered moneylender.

    He is accused of taking some 10 million yen (about $86,400) in "thank-you money" from individuals wishing to obtain the loans, and of using the funds to purchase investment trusts and for his daily spending.

    In their opening statement, prosecutors asserted that the JFC dealt with the loans they were approached for entirely at its main office, and that the loan applications were handled differently from ordinary ones.

    JFC branches covering relevant areas were reportedly instructed to assign the cases to higher-ranking staff than would normally be the case. Officials in charge quickly met with the loan-seekers, and gave them advice. The loan decisions were apparently first conveyed to the lawmaker and his secretaries.

    In court, the prosecution read out an interrogation transcript in which a JFC employee stated, "We worked to ensure the lawmaker's cases proceeded smoothly."

    The JFC is an entirely government-owned financial institution. In addition to supporting small and mid-sized businesses and agriculture, forestry and fisheries enterprises, it also supports people's livelihoods during emergencies such as disasters and epidemics.

    It is precisely because of this that we call for a much stricter equality of access.

    If certain criteria are fulfilled, applicants can receive unsecured, interest-free loans. Many firms and self-employed workers have struggled with their finances in the coronavirus crisis, leading to many applying for the loans and an often-delayed process to receive them.

    But, the accusations go, tapping Toyama to facilitate an application led to a smooth evaluation, and sometimes extra funds being added to the loans. A company executive also indicted in the case likened it to "first-class passengers getting priority boarding."

    Toyama was reportedly involved in a total of 3.7 billion yen (about $32 million) in loans handled at 34 JFC branches. The JFC has stated that "there were no differences in the speed of conclusions or assessments." However, lawmakers' secretaries were aware that there was a service handling cases introduced by politicians, and there is also testimony that, in some cases, the information was passed from secretary to secretary. It can't be helped if the JFC is seen as having systematically provided preferential treatment.

    Distortion of loan assessments through the mediation of the politically powerful cannot be allowed. To dispel the people's distrust, the government must thoroughly investigate the facts of the case.

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