Japanese Premier’s Aide in Stock Scheme

Prime Minister Noboru Takeshita acknowledged Thursday that his secretary was one of 76 people linked to top political and business leaders who had purchased unlisted shares of a real estate company that quadrupled in price after they were put on the Tokyo Stock Exchange.

Ihei Aoki, the secretary, “contacted me and told me it was very careless of him,” Takeshita told reporters.

Already named in the stock profiteering scheme were aides to former Prime Minister Yasuhiro Nakasone and the three politicians considered to be the leading candidates to succeed Takeshita when he steps down.

No violation of the law was involved, and at least two of the aides say they were making the purchases without the knowledge of their bosses. But when asked what he thought about “the moral issue” in potential conflicts of interest or in the privileged treatment the leaders received, Takeshita replied, “It was not a good thing to do.”

The prime minister acknowledged that his secretary bought the shares in 1984, when Takeshita was finance minister, and sold them shortly after they were put on the market in 1986. But he refused to say who had offered the unlisted shares, how much profit had been earned from the transaction, or how the profit had been utilized.

Takeshita, who took over as prime minister last November, acknowledged that the spreading revelations could significantly affect debate in Parliament on sweeping tax reforms, including implementation for the first time of a tax on capital gains by individual investors. The issue is expected to be considered at a special session of Parliament later this month or early next month.

Neither the present law nor the revisions Takeshita has proposed in the new legislation contains any provision covering unlisted stocks.

The shares involved in the widening scandal were those of Recruit Cosmos Co., a subsidiary of the publishing and data information firm Recruit Co., and were sold in 1984 to the 76 influential leaders through secretaries or relatives.

Without acknowledging personal involvement in offering the unlisted stocks to the 76 leaders, Hiromasa Ezoe, chairman of the company, resigned as a member of a governmental tax commission involved in drawing up the sweeping tax reform. He also stepped down as head of the firm.

Ko Morita also resigned Wednesday as president of the Nihon Keizai newspaper after it was revealed that he had made a profit of about $615,000 on 20,000 shares of Recruit Cosmos. Nihon Keizai compiles the Nikkei stock index, widely used as a major barometer of price movements on the Tokyo Stock Exchange.

Two secretaries of Nakasone acknowledged selling about 8,300 shares of Recruit Cosmos stock in two transactions, on Oct. 31, 1986, the day after the stock went public, and on the following Nov. 5, for proceeds of $1,046,000. Shares in the company were sold to the prominent leaders’ aides for about $10 a share in 1984 and were priced at more than $40 a share when they were put on the stock market in 1986.

Involvement in the profiteering scheme also has been acknowledged by aides to Shintaro Abe, secretary general of the ruling Liberal Democratic Party, and Michio Watanabe, chairman of the ruling party’s policy board. Both are considered leading candidates for a future premiership.