3rd Cabinet Member Quits in Japanese Stock Scandal

Prime Minister Noboru Takeshita’s Cabinet suffered another shock in Japan’s widening Recruit stock scandal Tuesday with the resignation of the third minister since the beginning of last month.

Ken Harada, director general of the Economic Planning Agency, resigned after admitting he had received political donations from Recruit Co., the firm at the center of the stock-trading and alleged influence-peddling scandal.

Harada, 69, told reporters in a televised news conference he did not think he had done anything wrong in accepting the payments but decided to resign to avoid controversy when the government submits its new budget for debate in Parliament in early February. The Cabinet approved the fiscal 1989 budget Tuesday evening.

Harada’s resignation followed that of former Justice Minister Takashi Hasegawa, who assumed his post in a Cabinet reshuffle Dec. 27 but resigned three days later amid disclosures that he received donations from Recruit.

Kiichi Miyazawa, finance minister and one of the leaders in the ruling Liberal Democratic Party, resigned Dec. 9 to take responsibility for his connection to questionable trading in the shares of a Recruit subsidiary, Recruit Cosmos Co. Miyazawa, Takeshita and scores of other leading politicians, bureaucrats and businessmen benefited from privileged trading in unlisted shares of Recruit Cosmos, a booming real estate developer.

The scandal has sparked a criminal investigation and seriously eroded public confidence in the Takeshita administration.

Takeshita has shown little sign of caving in to pressure, despite his own admission that a former aide and one of his relatives made substantial profits trading in Recruit Cosmos.

Harada admitted that one of his political support groups had received small donations from Recruit for more than 10 years until November. News reports said he also accepted an $8,000 payment from the company in September.

He denied granting any favors to Recruit, however, and said the donations were all within legal limits and properly reported.

Takeshita moved quickly to replace Harada in the Economic Planning Agency with Koichiro Aino, 60, a bus company executive and six-term member of the lower house of Parliament.

The budget approved by the Cabinet on Tuesday is approximately the same document proposed by the Finance Ministry last Thursday, with minor adjustments for foreign aid and defense.

Instead of a 5.9% increase, it would raise foreign aid by 7.8% to $6 billion. With other amounts not covered in the general accounts budget, Japan’s foreign aid is expected to exceed $10 billion.

Defense outlays were raised by 5.9% instead of the 5.2% increase originally proposed.