Global Policy Forum

Corruption Charges Swirling Around


By Calvin Sims

New York Times
February 20, 2000

In this country's long history of embedded political corruption, few cases have enraged Japanese society more than the bribery and influence-peddling scandal that forced Prime Minister Noboru Takeshita to resign in disgrace 10 years ago.

Mr. Takeshita, who was the third Japanese leader to step down because of corruption charges since World War II, admitted that he and his aides accepted more than $1 million in illicit payoffs, some in the form of securities, from a fast-growing information services company called Recruit.

So when a popular news magazine reported this week that the secretary to the current prime minister, Keizo Obuchi, had improperly acquired stock in a telecommunications company that later skyrocketed in value, the political opposition smelled blood and attacked.

Japan's chief opposition Democratic Party demanded that the prime minister's political secretary, Toshitaka Furukawa, appear before the Parliament to explain how he acquired shares in a little-known pager company just months before it was merged in 1988, eventually creating NTT Mobile Communications, the country's leading cellular telephone company.

Satsuki Eda, a Democratic Party legislator, said that the stock deal was suspicious because Mr. Obuchi was an influential policy maker in Japan's telecommunications industry at the time and had insider information of pending mergers. Mr. Obuchi's brother, Mitsuhei, also acquired shares in the paging company, Jomo Tsushin Services. The value of the mobile telephone shares soared when the company that emerged, popularly known as NTT DoCoMo, was listed on the Tokyo Stock Exchange in 1998.

The combined value of shares owned by Mr. Furukawa and Mr. Obuchi's brother increased from about $55,000 in 1988 to about $64 million today, according to local media reports. ''This looks very similar to the Recruit scandal in that you have high-level government officials and their relatives receiving stock from companies before the shares were available to the public,'' Mr. Eda said.

While acknowledging that his party cannot prove the charge, Mr. Eda said, ''We believe that the real holder of the stock is Mr. Obuchi, even though his name doesn't appear on the certificates.'' In past corruption scandals, many Japanese politicians used the names of subordinates or family members to conceal their own ownership.

The prime minister's close association with those involved in the scandal has prompted new questions about Mr. Obuchi among a populace that has become outraged by its leaders' accepting bribes and payoffs, especially during a prolonged recession. The political impact on Mr. Obuchi is unclear.

Analysts said that if the opposition proves that the shares were improperly obtained, the scandal could greatly damage his credibility and that of the governing Liberal Democratic Party, especially in advance of general elections, which the prime minister must call this year. ''If it's proven that these guys lined their pockets with this stock, it will resonate very badly and Obuchi will be in hot water,'' said John F. Neuffer, a political analyst here. ''But if the opposition doesn't come up with a smoking gun soon, the scandal is likely to fade away.''

The scandal, Mr. Neuffer said, comes at a time when the opposition has been seeking to discredit Mr. Obuchi after it was forced to abandon an 11-day boycott of Parliament last week. The opposition had hoped that the boycott, which stalled the government's budget deliberations, would bring an early election in the lower house, where the ruling coalition has more than 70 percent of the seats. But the effort failed.

Mr. Obuchi has categorically denied any wrongdoing on his part or by his aide and his brother. ''I think that people have negative feelings about it because the shares rose in value, but they were not obtained unlawfully,'' he said, answering questions this week in a routine appearance before Parliament. ''I couldn't have known that the company would be merged,'' he added.

Parliament, which is controlled by Mr. Obuchi's governing coalition, has not compelled Mr. Furukawa, the prime minister's secretary, to appear to answer questions. But he has filed a libel suit against Weekly Gendai, the magazine that broke the story. Democratic Party leaders have vowed to continue raising the issue until they receive an explanation of how the shares were acquired. Weekly Gendai reported that Mr. Furukawa had swindled the widow of the original owner of the shares, an early supporter of Mr. Obuchi, by having the stock illegally transferred to his name.

Opposition party officials said that the widow told them in an interview that she inherited the shares after her husband died in 1974 and never authorized the transfer to Mr. Furukawa. The officials said that at the very least Mr. Furukawa must provide proof that he acquired the shares legally. ''The public may well wonder how there can be such a profitable transaction,'' Naoto Kan, policy chief for the Democratic Party, told Mr. Obuchi in a session of Parliament this week.

In what appears to be a counterstrike by the Liberal Democratic Party, a former resort developer said in a magazine article published on Friday that he gave Yukio Hatoyama, head of the Democratic Party, $500,000 through donations and fund raisers from the late 1980's to 1991. At a news conference, Mr. Hatoyama adamantly denied the accusation, saying, ''I swear there was no giving or receiving of money involved.''

The former resort developer, Toshikazu Hanada, made the charges in Shincho 45, a monthly magazine. Mr. Hanada was recently released from jail after serving a term for his role in a 1991 scandal involving unlawful lending by Fuji Bank. Despite widespread calls for fundamental changes in Japan's electoral system and rules governing campaign contributions, the likelihood of such reforms is remote, and the country's political system remains plagued by corruption, political analysts said.

''In recent years, Japanese politicians have made a lot of promises of reform, but the reality is that nothing has changed, and they are just as dirty and corrupt as they have ever been,'' said Takashi Kakuma, a freelance journalist who has covered Japanese political scandals for 30 years.

Mr. Kakuma said that with the advent of new information and communications technologies in Japan and the growing number of corporate mergers and acquisitions, political corruption had taken on new forms. ''Politicians are enriching themselves and their parties through secret stock transactions, market manipulations, and the use of insider information, which are against the law,'' Mr. Kakuma said.


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