Japanese Official Offers to Quit Over Aide’s Stock Deal

Japanese Finance Minister Kiichi Miyazawa admitted Thursday that his secretary had made a windfall profit of $181,130 in a controversial stock deal, and he said he is prepared to resign when passage of a major tax reform bill is assured.

It was the third time Miyazawa had changed his story about the 1986 deal, which was technically legal but ethically questionable.

After asserting since last July that a friend of his secretary had carried out the transaction, Miyazawa conceded in a statement to Parliament that the secretary, Tsuneo Hattori, had purchased the stocks himself and sold them 16 days later.

Hattori resigned as Miyazawa’s secretary in October in the wake of revelations that Recruit Cosmos Co., a real estate developer, had distributed unlisted stocks at bargain prices to aides and relatives of Miyazawa and 75 other politicians, businessmen, journalists and scholars. Among them were both Prime Minister Noboru Takeshita and his predecessor, Yasuhiro Nakasone.

“My future (as finance minister) should be decided in a way that will contribute to passage of tax reform. . . . To achieve that, I am willing to accept whatever happens to me,” the 69-year-old leader, regarded as one of the top two candidates to succeed Takeshita, told reporters.

Six tax bills to implement an unpopular general consumption tax of 3% in exchange for cutting other taxes passed the lower house of Parliament on Nov. 16 and are being debated in the upper house. Takeshita has staked his political future on enactment of the reforms, which the ruling Liberal Democratic Party has been trying to carry out for the last nine years.

Even before Miyazawa’s new admission, a high government official told a group of foreign correspondents that Miyazawa’s departure from Takeshita’s Cabinet is only a matter of timing. At the latest, the official said, it would come after enactment of the tax reforms as part of an expected Cabinet reshuffle.

A series of disclosures has forced Miyazawa to change his original story three times.

In July, he asserted that a friend of Hattori had used his secretary’s name to obtain the shares. In October, he admitted that his own name, not Hattori’s, had been used. Then, in November, he acknowledged that Recruit Cosmos had offered the shares directly to Hattori, not to Hattori’s friend.

But until Thursday, Miyazawa had insisted that neither he nor Hattori had carried out the transaction, nor had either of them profited from it.

In his statement, the minister said Hattori himself paid $246,771 for 10,000 Recruit Cosmos shares on Oct. 15, 1986, and 16 days later, after they were listed on the over-the-counter market, sold them for $433,495. Deducting brokerage fees and a transactions tax, the profit amounted to $181,130, he added.

Silent on Source of Funds

He refused, however, to disclose how Hattori obtained the funds to purchase the stocks.

“Having trusted Hattori and worked with him for many years,” Miyazawa told an upper house committee of Parliament, “I am overwhelmed with heartbreaking grief.”

Miyazawa said that Hattori, in tears, had finally told him that he had withheld the facts in the hope of sparing Miyazawa embarrassment. “Instead, I have created an irretrievable situation,” Miyazawa quoted his former secretary as telling him.

Noting that his earlier series of statements to Parliament “were conspicuously at odds with the truth,” Miyazawa declared: “There is no excuse I can offer.”

Shintaro Abe, secretary general of the ruling party, said after conferring with Takeshita that the party will stand behind Miyazawa to ensure that the tax bills are enacted.

Abe, the other leader in line for the prime minister’s job, was among the 16 members of Parliament whose aides were named as recipients of Recruit Cosmos stock at bargain rates. Attacks, however, have focused on Miyazawa as the minister in charge of the unpopular tax reform.