TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/042489/04248900.025

Text File | 1990-09-17 | 9KB | 151 lines

WORLD, Page 37

JAPAN

A Scandal That Will Not Die

Despite loose ethics, the Recruit fiasco may topple Takeshita


    He licked his lips. He sipped water. His ashen face looked
aged. The strain was evident as Prime Minister Noboru Takeshita
faced his challengers in the Diet. The embattled Japanese leader
made a series of extraordinary admissions to a special session of
the Diet budget committee. Last October Takeshita flatly denied any
connection to the burgeoning scandal that has linked dozens of
Japanese politicians and bureaucrats to a money-and-favor game
played by the Recruit Co., a $3.25 billion information-and-
real-estate conglomerate. But last week Takeshita conceded that
over the years he and others close to him received nearly $1
million from Recruit. Referring to his October disclaimer,
Takeshita pleaded a faulty memory: "I probably did not have a clear
recollection of the matter then."

    In the wake of the Prime Minister's latest disclosures,
opposition members intensified their demands that he step down.
"Your hands are dirty," charged Socialist Diet member Kanji
Kawasaki. Takeshita, 65, refused to do so, vowing instead to reform
the system. To his critics, Takeshita declared, "I have no
intention of taking a quick way out of this crisis."

    Though Takeshita appeared determined to grit through the
crisis, the spreading scandal -- the country's most pervasive in
modern times -- may yet topple his Liberal Democratic Party
government, much as a series of financial misdeeds brought down
Prime Minister Kakuei Tanaka in 1974. Since Recruit's involvement
in influence peddling among the political bigwigs first came to
light in the press last June, 20 people have been forced to resign,
including three members of Takeshita's Cabinet. The list of those
implicated, numbering 155, includes not only L.D.P. and opposition
politicians but also prominent members of Japan's powerful
government bureaucracy, businessmen, academics and newspaper
executives. If Takeshita should survive the scandal, the main
reason will be that all the L.D.P. leaders are similarly tainted.

    Ethics and politics -- can the two go together? It sometimes
seems not. In an eerie parallel to the trials of U.S. House Speaker
Jim Wright, Japan's leading politicians are under fire for
misunderstanding -- or missing -- the connection. In both
countries, the lines are often hard to draw, as changing standards
of morality are applied to the fuzzy world of campaign financing.

    For Japan, the Recruit scandal is raising profound questions
about kinken-seiji, or money politics, and the way Japan conducts
its public business. On one level the issue is simple bribery.
Recruit's mercurial founder, Hiromasa Ezoe, 52, nine other
businessmen and three officials of the Labor and Education
ministries have been arrested for alleged bribery or violation of
securities law (so far no charges have been filed against any
elected politician). But on another level the question is whether
Japanese politics is so blatantly suffused with the passing of cash
that it is practically impossible for officeholders to avoid the
appearance, if not the actual commission, of impropriety. Said
Takako-Doi, chairwoman of the Japan Socialist Party: "The Diet as
well as politicians have lost the trust and confidence of the
public."

    The constant stream of fresh disclosures, overshadowed only
briefly by the death and funeral of Emperor Hirohito, has proved
costly for Takeshita. Last week the popularity rating of the
Takeshita Cabinet hovered around 10%, a postwar low. The Prime
Minister's fall from public grace comes only partly from outrage
over Recruit. The Japanese also bitterly resent a new 3% national
consumption tax, part of a reform package that will eventually
reduce taxes. In several recent local elections, these issues have
badly hurt the L.D.P., which has been in power continuously since
the party's formation in 1955. No less partisan an observer than
Shintaro Ishihara, a senior member of the party's right wing,
admits that if elections were held now, "it would be suicide for
the L.D.P."

    Recruit was founded as an advertising-sales agency by Ezoe in
1960 with an investment of $2,000. Acting in accordance with his
favorite slogan, "Money Comes First in This World," Ezoe built the
three-man shop into a corporate behemoth, branching into real
estate, supercomputers and restaurant and hotel management as well
as a variety of information services. Stock in the expanding
conglomerate was closely held until October 1986, when shares in
its real estate subsidiary, Recruit Cosmos, were publicly listed
on Tokyo's over-the-counter market. Those shares became a new and
virtually cost-free vehicle for peddling influence.

    For nearly two years before going public, Ezoe and other
Recruit officials commonly offered stock shares at about $20 to
selected individuals, many of them in the Diet and the bureaucracy.
Once the stock started trading on the open market and soared in
value, many of the recipients sold their shares, reaping hefty
profits. Frequently, the transactions were recorded in the names
of aides or relatives.

    Aides and relatives of Takeshita and his predecessor, former
Prime Minister Yasuhiro Nakasone, are known to have purchased
shares of Recruit Cosmos -- 12,000 and 29,000 respectively. Both
men deny personal involvement. Those transactions, Takeshita
declared last week, were "their personal dealings, not mine."

    What's wrong in all this? In Japan distributing stock before
a firm goes public is not illegal; in fact, many newly formed
companies routinely ask banks and other firms to purchase a portion
of their unlisted stock before the public sale to prevent market
volatility once it is trading. But prosecutors in the Recruit case
intend to prove that the offers in many cases constituted bribes
in exchange for anticipated political and business favors. If the
prosecutors find evidence of a political quid pro quo, recipients
could be charged with accepting bribes.

    While Takeshita maintains that he did not profit from stock
deals, he did finally acknowledge receiving from Recruit sizable
gifts in other forms. The Prime Minister conceded that in 1986 and
1987 the company donated $259,000 to his political organizations.
He also admitted that Recruit bought more than $570,000 worth of
tickets to two fund-raisers held for him in Tokyo and Iwate
prefecture in May 1987. Such contributions are not illegal, but
these may have exceeded legal limits imposed after the Tanaka
scandal.

    Japan is no different from other industrialized countries in
permitting individual and corporate contributions to politicians,
parties and causes. But the amounts allowed in Japanese politics
are large by any measure, and the system has long tentacles.
Takeshita, like other L.D.P. faction leaders, used the huge sums
he raised to aid the political careers of lower-ranking members in
his faction.

    Diet members of all ranks, moreover, are routinely expected to
ante up for their constituents at weddings, funerals and other
rites of passage. A survey of 89 Diet members by the daily Asahi
Shimbun showed that each spent about $4,200 a month on an average
of seven weddings and 27 funerals. Thus, despite the call by
Takeshita and others for campaign-financing reform, University of
Tokyo political scientist Takashi Inoguchi remains pessimistic.
Says he: "How can we carry out reforms when even the voters are
getting money?"

    Reforming the system could take a very long time. More
immediately, Takeshita is eager just to get the Recruit scandal
behind him. For one thing, the Diet's opposition forces are holding
hostage the nation's budget, which should have been in place April
1. They refuse to debate it until the L.D.P. agrees to allow
Nakasone to testify under oath about his role in the Recruit
affair. For another, Takeshita must set a date for elections to
the Diet's upper house by Aug. 13, and in the poisonous atmosphere
created by Recruit, the L.D.P.'s chances of winning the 54 seats
it needs to retain a majority are less than certain. Finally,
Takeshita's own lease on party and government office comes due in
October, and he wants to reclaim it for another two-year term.
Should he fail to do so, the Recruit fiasco could be the reason.
April may yet prove the cruelest month for Noboru Takeshita.