Foreign Bribery Scandal Muddies Japan’s Casino Legalization Gamble
10 Jan 2020

In December 2016, the Japanese Diet passed the integrated resorts promotion law, the first in a two-step legislative process to legalize casinos in Japan. Japan passed the promotion law shortly after the ruling Liberal Democratic Party (LDP) – the party of Prime Minister Shinzo Abe — won enough seats in the July 2016 Upper House election to no longer be reliant on their junior coalition partner, the Komeito. This Upper House election was significant for casino-related developments because it allowed the LDP to bypass Komeito, a political party backed by an influential Buddhist group that opposes gambling on principle.

With the goal to open the first integrated resorts in 2022 or 2023, Abe’s vision, when this legislation first passed, was to use casinos as the cure to the post-Olympics “hangover” – the dip in economic activity that many host nations of the Olympics suffer. Since then, the casinos initiative has pressed forward under Abe’s leadership.

Media coverage and risk analysts covering the issue at the time anticipated the dangers of organized crime getting involved in newly opened casinos. Media outlets may have overblown the risks of organized crime’s overt involvement. However, more soberingly, risk analysts were seriously concerned about the business opportunity that newly legalized casinos might provide to organized crime – such as in contracts for the physical construction of the casinos that could be won by subcontractors or sub-subcontractors controlled by organized crime.

Interestingly, these anticipated risks have yet to materialize in a publicly noticeable way. However, an important unanticipated risk has manifested itself in recent weeks as casino-related political corruption has come to dominate the headlines. A Chinese company has been under fire for giving bribes to at least six Japanese politicians. Such bribes would be illegal under the Political Fund Control Law, which bans donations from foreigners or foreign companies. Apparently, legalizing casinos not only provided an opportunity for the involvement of organized crime, but also the opportunity for foreign actors to get involved in corruption.

As the casino-related bribery scandal continues to grow, last Monday, Mikio Shimoji became the first politician to acknowledge that he received money from an individual connected with 500.com, a Chinese company interested in operating a casino in Japan. Shimoji is a member of the opposition Nippon Ishin party. Shimoji submitted his resignation to Nippon Ishin on Tuesday, but the party rejected the letter, instead formally expelling him the next day. Shimoji is still debating whether to resign as a lower house member.

Shimoji’s admission lends credibility to the accusations directed against four other lawmakers suspected of receiving money from 500.com: Takeshi Iwaya, Masahisa Miyazaki, Hiroyuki Nakamura, and Toshimitsu Funahashi, all of whom belong to the LDP. As part of the same scandal, LDP politician Tsukasa Akimoto was arrested on Christmas Day on suspicion of receiving bribes from 500.com. Akimoto resigned from the LDP that very day, though he did not step down as a lower house member.

By Mina Pollman, The Diplomat, 10 January 2020

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