Aso’s Hidden Wealth: How “disclosure” works in Japan

Aso: Just what is he worth? Stippy investigates how Japan's politicians legally hide their true wealth from us
Aso: Just what is he worth? Stippy investigates how Japan's politicians (legally) hide their true wealth from the public, and pay incredibly low taxes on their real estate in the process
Have you made a donation to your local LDP politician lately? I hope not. If you read the Nikkei on the weekend of the 26th October you might have noticed the two page spread (p6~7) detailing the assets of the senior (and not so senior) members of the new Aso cabinet. Given the amount of corruption in Japanese bureaucracy, it sounds like a good idea to force a certain amount of disclosure so that citizens can understand where vested interests might lie, but does this really help us to discover the financial worth of the politicians here?

For a start, in Japan there is no need to disclose any bank deposits that are on call. With Japanese interest rates as they are, something like 60% of all deposits in the banking system are on call so it’s likely that our friendly politicians also have a reasonable amount of cash stashed away in perfectly legal domestic bank accounts that we don’t know about. Furthermore if they are smart enough to cancel their teiki yokins (term deposits) a day before the first day that they are sworn in and shift the cash to their futsu koza (Savings Account) then we will be none the wiser. I’m assuming that the main reason for disclosing cash balances is to look for sudden and large changes which might smell of bribery, so with interest rates in Japan being almost the same for term deposits and savings accounts, there should be no reason why one has to be disclosed, and the other not. Seems like a gaping loophole that has been left open on purpose to me. Given the large expenditure associated with most political behaviors, I doubt if we would really notice with a once a year snap shot anyway, but clearly we have absolutely no transparency without seeing all deposit information. Who on earth came up with this rule? It is astounding.

And then there is land. For those of you who didn’t read it, you might be interested to read that Aso is the biggest land owner in the cabinet. He has a total of over 25,000m2 of land dotted across the country in four locations (five if you include his wife’s rental property in Setagayaku). Will he will really be representing the average Japanese battler. But what caught my interest this time was where he owns the land and how much he’s claiming it is worth. While I’m not an expert on his rice paddies in Fukuoka, I do know a little about central Tokyo real-estate. Does this man really own 2,215m2 of real-estate in Shibuya? That is over 700 tsubo (this being the Japanese way to measue land area, where one tsubo – or “坪” – is about 3.3 square meters)!! For people who haven’t been looking at Tokyo real-estate recently, I can tell you that anything over 150m2 is unusual in central Tokyo and people usually drop their jaws when they hear that to own property near the station at Den’enchofu (田園調布) you have to own a minimum of 100 tsubo (330 m2. Yes, the law says that you cant own a block of land smaller than this withing thre reaches of the station!) We’re talking 7 times the “very rich” factor.

Let’s just assume that the newspaper was correct and he does own 700 tsubo of land in Shibuya. According to a source of mine (and a bunch of police offices suddenly standing guard outside his property since he became PM) I’m lead to believe that Aso’s property isn’t just anywhere in Shibuya, it’s in Shoto (松涛)! Shoto is the area to the West of NHK between Shibuya and Harajuku which is known to boast some of the most expensive residential property prices in the country. If you have a spare 600 million yen, you might want to check out Mikitani-san’s old apartment (ala Rakuten fame) there which is up for sale at the moment near the New Zealand embassy. Yes, you did read right. 600 million yen for an apartment. So I wonder how much Aso’s plot of land is worth – after all that’s what this disclosure is all about isn’t it? Well according to the Nikkei, this huge block of land is worth a whopping 290 million yen. That’s only a touch over 41 men (410,000 yen) per tsubo. Please tell me where I can buy some land anywhere in Tokyo for that price! To put that in to perspective, a quick search on yahoo 不動産 (Yahoo! Japan’s real-estate section) (include a link?) suggests that the going price for houses in that general vicinity is closer to 800 men (8,000,000 yen) per tsubo. Land in Shoto could be worth even more because it is so rare to hit the market. Taking this conservative value, Aso’s land should be worth closer to 5.5 billion yen (that’s about $60 million USD depending on what day you decide to check xe.com).

This is a photo of Aso’s residence. If you click on it, you can scroll around, and check out his ‘hood on Google. He lives right next door to the Embassy of New Zealand (maybe that’s why his land is so cheap!):

Prime Minister Aso's house
Prime Minister Aso's house - We value it at 5.5 billion yen, but the PM says it's worth only 290 million. Now that's disclosure!

He’s really doing Japan a service with his friendly disclosure. I wonder if the average citizen realizes how vastly these property values are understated? Then again, maybe they don’t even care. Apparently the rationale behind the number is that this is the figure used in calculations for the annual property tax that he pays to the government. (固定資産税の課税標準価額). Surely that makes this scam even worse? Not only are they grossly understanding his net worth in such a way that most people in Japan would have little to no understanding of, this also means that he gets away with paying tax calculated on a real-estate value which is only a fraction of what it is really worth. While I’m generally opposed to taxes on real-estate like this in spirit, I can’t see how the PM can justify calculating his tax based on a value of his house which is approximately twenty times understated. I thought Japanese had a socialist taxation system but clearly they aren’t taxing the land owners enough.

To rub salt into the wounds of this disclosure property, his property in downtown Shibuya seems to be deceptively understated also. Taking the value at its face, he clearly lives in a dog house (albeit a 200+ tsubo dog house). The “disclosure” article notes that the building on this property is only worth 9 million yen. Given that it usually costs between 50~100 men (500,000-1,000,000 yen) per tsubo to build an ordinary house then we’re out by a factor of 15~20x. That of course is assuming that his house is of the same quality that you and I would order if we built a house. Has anyone seen what sort of house this Aso lives in? You can get the general picture from the image above, but it is huge! (Not a “mansion” on Japanese standards, but a real mansion!) I’m assuming that the rules allow you to just disclose the fully depreciated value of any buildings and that his house is over 20 years old, but I haven’t been able to confirm this.

If you were hoping to get some stock picking ideas from their share portfolios then you’ll probably be disappointed. Most of the politicians just seemed to own shares in their own family holding companies (“~興産”) and boring blue chips. The most commonly owned stock was NTT (3 pollies), followed by Hitachi, JAL and Nomura (each owned by 2 pollies). Notably no one owned shares in Livedoor which I only mention as one person still seemed stuck with shares in Seibu Rail (西武ホールディングズ), another major Japanese company to be delisted for fraud a few years ago. Most of the other information isn’t of much help although I did get a bit of fun out of comparing car fleets amongst them. While I know that Toyota do make good cars, they felt a little over represented with 10 of the new cabinet members driving one (versus 3x Nissan, 2x Merc (Sato and Hatoyama) and 1x Audi (Aso)). Perhaps Aichi prefecture has more of an impact on Nagatacho than we thought.

6 thoughts on “Aso’s Hidden Wealth: How “disclosure” works in Japan”

  1. Well if he’d bought a Toyota at least he’d have done something for the economy. The guy claims to be in touch with the general public but he wasn’t ever elected to his post and therefore obviously doesn’t feel any kind of burden of accountability. And you know how it is here: Once you’ve been a PM, you get the title “former PM” (元総理大臣, moto so-ridaijin) for the rest of your life. Even dorks like Mori who was also unelected and never even stood for reelection. It purely comes down to personal ambition for these guys, and to hell with the rest of us.

  2. What I can’t understand is why politicians don’t get grilled for this sort of thing in the newspapers and other media. I find it disturbing that I am reading about the finer (more dodgy) points of Aso on a site like this. Why dont the big media do the same analysis, and draw the same conclusions as you? You would think this would make a fantastic article in mainstream Japanese news – even if he is doing all this legally, at least raising the legality of it would make people notice it, and maybe even push their local politicians to change the legislature on disclosure. Any ideas?

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