Japan’s Stock Scandal Widens After Finance Minister Quits

A stock scandal widened over the weekend when the opposition Japan Socialist Party released the names of 17 business and government officials reportedly involved in questionable stock purchases, news reports said.

Two municipal assembly members, whose Saitama and Kanagawa regions form the hub of development in the outer Tokyo area, were included on the list along with banking, real estate and company officials, Kyodo News Service said Saturday.

Okiyuki Hoashi, a member of the Urawa Assembly in Saitama prefecture, and Chikau Matsumura, a former member of the Yokohama Municipal Assembly in Kanagawa prefecture, were among those reportedly offered 170,000 shares in the real estate firm Recruit-Cosmos Co. before their public listing, the report said.

Commentator Named

Political commentator Kiyoshi Iijima, who often appears on television, was also named as a figure in the stock scandal, in which a number of influential individuals were offered bargain-priced shares of Recruit-Cosmos--along with interest-free financing for the purchase.

Finance Minister Kiichi Miyazawa resigned from the Cabinet last Friday and admitted that he gave conflicting testimony regarding his role in the purchase of Recruit-Cosmos stock.

Also Friday, Ei Shikiba, an executive of Nippon Telegraph & Telephone, was removed as director of the telephone giant’s data communications department for buying unlisted Recruit-Cosmos shares. The company’s president, Haruo Yamaguchi, said Shikiba will remain as an executive director of the company with no specific responsibilities.

Nippon Telegraph & Telephone, Japan’s largest telephone company, has been criticized for its close ties with Recruit-Cosmos, which reportedly include the leasing of large numbers of telephone circuits at reduced rates and the resale of two U.S.-made supercomputers.

More than a dozen leading politicians, including Prime Minister Noboru Takeshita and former Prime Minister Yasuhiro Nakasone, have been linked to the stock profiteering deal devised by Japanese businessman Hiromasa Ezoe, founder of the information conglomerate Recruit-Cosmos.

But among the top politicians, only Miyazawa was directly involved. He claimed that he had not been informed that his former aide purchased and then sold 10,000 shares in Miyazawa’s name for a profit of $185,000.

Offered Chance to Buy Shares

Ezoe reportedly offered individuals from the world of government, business, media and finance the opportunity to buy shares in Recruit-Cosmos before their over-the-counter listing in October, 1986.

Shortly after the shares were offered for public trading, their value rose sharply, earning large profits for shareholders. In Japan, shares usually rise upon the start of public trading, and those who obtained Recruit-Cosmos shares would have known they stood to profit in the deal.

Opposition leaders spearheading a probe of the stock deal charge that government officials were offered Recruit-Cosmos shares in return for political favors and have blocked parliamentary debate on a proposed package of tax reforms to press their demands for a full investigation of the affair.

Miyazawa said he hoped his resignation would pave the way for passage of the tax bills, and, following his departure, the governing Liberal Democratic Party set a timetable for debate on the tax reform bills.

If deliberations are carried out smoothly, the package will pass before Dec. 28.