`Recruit' scandal: a yen for politics. High costs of Japan's political life a spur to `structural corruption'
``Japanese politics cost lots of money.'' That simple statement by veteran political insider Shigezo Hayasaka explains the seemingly endless corruption scandal that has dominated the political scene for the last six months.
The so-called ``Recruit scandal'' has touched an amazing array of people, from top leaders of the ruling party to well-known businessmen and even some senior bureaucrats. All of them bought unlisted shares of Recruit Cosmos, a real estate development firm, before the company went public. Most sold at a healthy profit shortly after.
In the Recruit case, Hirmomasa Ezoe, founder of the Recruit group, offered key leaders a sure-fire deal. But behind one man's attempt to buy influence lies a system that virtually cements a link between money and politics, political analysts say.
Politicians need enormous funds simply to stay in office. Businessmen, farm organizations, and others seek access to the powerful axis of bureaucrats and politicians that determines policy. They win that access with money.
The phenomenon is so well known, and even accepted, that the Japanese have a name for it - kozo oshoku or ``structural corruption.'' Though Japanese are mostly cynical about ever getting rid of structural corruption, the sheer scale of the Recruit case has been shocking.
The Recruit case ``is just the tip of the iceberg,'' says Mr. Hayasaka. He should know. Until a few years ago, Hayasaka was the personal secretary to Japan's most infamous political boss, former premier Kakuei Tanaka.
Individual politicians, Hayasaka says, are driven by the constant need to raise money - for daily expenses and for huge war chests to fight for reelection. But there is a ``gap'' between the costs of politics and legitimate income. The need to fill that gap, he argues, is the ``biggest reason for structural corruption.''
Take a typical four-time ruling Liberal Democratic Party (LDP) member of the Diet (parliament). His monthly operating expenses total 10 million yen (about $80,000). About 2.3 million yen goes to pay a staff of 15 aides. Another 800,000 yen is spent on attending weddings and other parties that require customary gifts of 10,000 yen. Office expenses come to 2 million yen. The remainder - about $40,000 a month - funds the lavish wining-and-dining of guests that is crucial to building personal relationships here.
At the same, the politician must raise money for his reelection. This can cost at least 200 to 300 million yen for everything from fliers to drinking parties with local campaign organizers.
If the Dietman strictly followed the law, his income couldn't come close to these costs. The state funds only a small office with two aides, limited travel to the home district, and certain mailing costs. The law limits a candidate to spending only 15 million yen (about $120,000) on elections. It restricts organizations to a donation of no more than 1.5 million yen ($12,000) to each candidate.
As a result, says LDP leader and former Trade Minister Michio Watanabe, politicians ``look for some kind of loophole.'' The preferred method, he says, is to form multiple support organizations, each of which can receive donations for the candidate. Top politicians, such as Prime Minister Noboru Takeshita, have organizations with thousands of members, each paying hefty membership fees.
Fund-raising parties are numerous, and a single one can yield as much as 50 million yen (about $400,000). Companies regularly instruct their employees to buy tickets, although only a fraction of the ticket holders actually attend the party.
The soaring Tokyo stock market has become a favored source of money. Politicians set up paper companies for stock speculation, often using the names of friends and relatives. They are aided by stock deals like the one offered by Recruit or by insider tips. Before an election, brokerages are said to help politicians by deliberately pushing up the value of so-called ``political stocks.''
Finally politicians ``receive under-the-table commissions from corporations or other organizations'' for favors, says Hayasaka.
The higher a politician rises, the more his expenses rise and the more he gets tied into this cycle. Political leaders parcel out money to their younger followers in exchange for loyalty. Hayasaka reveals that Tanaka provided at least 30 to 50 million yen to each of his 134 faction members for elections. Some received as much as 100 million yen (about $800,000). ``There were no receipts,'' he says. ``Those members really thanked him with tears in their eyes.''
Ultimately, Tanaka got caught in the most spectacular corruption case in post-war politics - the Lockheed scandal. He was arrested, in 1976, along with 16 others, for taking bribes to convince the Ministry of Transport and All Nippon Airways to buy Lockheed aircraft. Tanaka did not lose his power until incapacitated by health problems in 1985.
The remarkably stable Japanese system rests on a trinity of power formed by the elite bureaucracy, the ruling LDP, and major business organizations.
Hayasaka, who reportedly also received Recruit shares, sees the desire for access to the power elite as a key to the scandal. Recruit founder Ezoe was a ``business genius,'' says Hayasaka. ``But from the point of view of Japanese economic leaders, he was an outsider. He went hurriedly to become an insider.'' Mr. Ezoe's stock options were not illegal, as long as he did not receive specific favors in return. Only one arrest for bribery, of a local official, has been made so far, but the Tokyo Prosecutors Office is expected to spring further indictments.
The LDP is now trying to calm public outrage, and has set up a special commission to recommend political reforms.
Hayasaka argues that limits on donations should be raised to more realistic levels and stricter reporting be enforced. If the costs of politics are not dealt with, he concludes, ``then there will be another Recruit case in the future.''