Official investigation into diversion of disaster funds

October 4, 2012

Diet panel to probe diversion of disaster recovery funds for other purposes

http://mainichi.jp/english/english/newsselect/news/20121004p2a00m0na014000c.html

A Diet panel is set to launch an investigation into the diversion of funds allocated from the state budget for disaster recovery efforts to disaster prevention measures outside disaster-stricken regions, legislators said.

State Minister for Disaster Recovery Tatsuo Hirano has already begun a probe into the case as the budget for the restoration of areas devastated by the March 2011 Great East Japan Earthquake, tsunami and the ensuing Fukushima nuclear crisis are mainly funded with a special tax hike.

Officials with the Finance Ministry and other ministries concerned explained the diversion of such funds to top members of the House of Representatives Committee on Audit and Oversight of Administration behind closed doors on Oct. 3. In response, the committee decided to investigate the case through a subcommittee while the Diet is not in session on the grounds that it must get to the bottom of the problem.

During the explanatory meeting, the legislators called into question the diversion of funds earmarked for disaster recovery projects to eight other projects, including boosted measures to protect research whaling ships from attacks by the anti-whaling organization Sea Shepherd and an Okinawa Prefecture national highway improvement and construction project.

The Agriculture, Forestry and Fisheries Ministry argued that the stepped up measures to protect whaling ships is necessary for the recovery of quake- and tsunami-stricken Ishinomaki, Miyagi Prefecture, which is home to key whaling-related facilities.

The Land, Infrastructure, Transport and Tourism Ministry also defended the project to improve and construct national highways in Okinawa because the project is covered with funds for nationwide disaster prevention efforts, which are part of the disaster recovery budget.

Legislators raised questions about the explanations.

"Members of the general public will hardly understand such diversions. It's the responsibility of the Diet to conduct an investigation into the issue although the Diet isn't in session now," one of the top members of the committee said.

"I suspect that officials used various tricks to divert disaster recovery funds," another said.

Furthermore, the Economy, Trade and Industry Ministry has come under fire from the legislators for using funds to extend subsidies for businesses in disaster-hit areas to a contact lens factory in Gifu Prefecture which is outside the disaster areas.

A ministry official explained that it extended the subsidy to the Gifu company because its factory has procured materials for contact lenses from Fukushima and Ibaraki prefectures, which are affected by the disasters.

Apart from the eight projects, the Mainichi Shimbun has also learned that the Education, Culture, Sports, Science and Technology Ministry set aside 4.2 billion yen for the Japan Atomic Energy Agency's project to build nuclear fusion research facilities in Aomori and Ibaraki prefectures.

The ministry justified the practice. "The basic policy of disaster recovery stipulates that the knowledge held by industries in disaster-hit regions should be fully utilized to establish a hub for technological innovation in such areas," an official said.

The diversion of funds is in line with the government's basic policy of disaster recovery set in July last year, which allows funds set aside for disaster recovery to be used for disaster prevention measures across the country.

Following the March 11 quake, numerous local governments asked the national government to strengthen disaster-prevention measures in areas other than quake- and tsunami-stricken regions. In response, the central government decided to use about 1 trillion yen out of an estimated 19 trillion yen -- which is expected to be set aside for recovery funds -- for areas outside disaster regions.

The disaster recovery budget is funded through an increase in residential taxes that local governments levy on their residents.

The basic policy of disaster recovery also calls for the use of funds allocated for recovery efforts to finance measures to prevent manufacturers affected by the March 2011 disasters from moving out of Japan.

By fiscal 2012, the government had allocated approximately 1 trillion yen to cover nationwide disaster prevention expenses. The ministries and agencies concerned demanded that some 940 billion yen be earmarked from the fiscal 2013 state budget for such projects. Therefore, the total amount is viewed as certain to surpass the 1 trillion yen that the government had initially planned.

State Minister for Recovery Hirano as well as Finance Minister Koriki Jojima said they will consider closely reviewing allocations of funds for disaster-prevention measures implemented outside disaster areas.

"I think the use of funds raised through a tax hike for such purposes is questionable," Hirano told a news conference on Sept. 19.

"We'll strictly limit projects to be covered by such funds as we compile the next fiscal year's budget," Jojima told a news conference on Oct. 1 shortly after being appointed to his post.