Ex-Vice Minister of Labor Held in Japan Stock Trading Scandal

Prosecutors made two more arrests Wednesday in an insider-trading scandal that has raised questions about Japan’s big-money politics and stained the vaunted integrity of its civil service.

Those arrested were Takashi Kato, 58, a former vice minister of labor and the highest-ranking former public official held in the scandal, and Masao Tatsumi, 46, a former senior executive of the business information conglomerate Recruit Co.

Tatsumi is accused of bribing Kato in 1986 to obtain favorable treatment of Recruit by the ministry.

Kato was among more than 150 senior bureaucrats, political figures and businessmen who were offered bargain shares in Recruit-Cosmos Co., a real estate subsidiary of Recruit, before the company was listed. When the shares went on public sale, their value soared and Kato made a profit estimated at about $56,000.

12 Arrested So Far

Prosecutors have arrested 12 people so far, but released two junior Recruit officials Tuesday and have yet to decide whether formal charges will be filed against them.

They say Kato influenced a Labor Ministry decision on publishing employment information that was to Recruit’s advantage. A lower-ranking ministry official, Shigeru Kano, was arrested on bribery charges last month.

“For Japan’s civil servants, this spelled a most embarrassing scandal that discredited them all in the eyes of the public,” the influential national newspaper Asahi said in an editorial.

Ex-Utility Chairman Held

Kato’s arrest came two days after that of Hisashi Shinto, 78, former chairman of Nippon Telegraph and Telephone Corp., the world’s largest company in terms of stock value.

Shinto also is being held on bribery charges in connection with alleged favorable treatment of Recruit by the giant utility.

The administration of Prime Minister Noboru Takeshita has been buffeted by the scandal since the first reports of it last June.

Three Cabinet ministers have resigned because of links to Recruit, the governing Liberal Democratic Party has lost interim elections and a storm surrounds political and corporate ethics.

On Wednesday, opposition parties boycotted debate on the budget, bringing Parliament’s business to a halt, and renewed their demands that Takeshita call new elections and resign so the public can give its verdict on the scandal.