UPDATE / JAPANESE POLITICS : Push for Reform Gives Way to Business as Usual : Big money and familiar faces are still driving forces.

Whatever happened to political corruption in Japan?

Last year, public outrage over shady fund raising in the stock market toppled the government of former Prime Minister Noboru Takeshita, led to the indictment of a dozen officials and businessmen and contributed to the ruling Liberal Democratic Party’s defeat in the election for the upper house of Parliament.

As recently as May, Prime Minister Toshiki Kaifu, whose spotless record made him one of the few senior party leaders qualified for office, declared that he would “stake the life of my government” on reform of an electoral system that everyone agrees has been breeding widespread abuse.

But it appears things have quickly returned to business as usual in Japan’s costly game of “money-power politics,” as the critics call it.

A report issued this week by the Home Affairs Ministry underscored that point: Despite all the brouhaha over the Recruit insider-trading scandal, political parties and organizations raised a record $1.3 billion last year.

The figure was only slightly higher than the one reported for 1988 but still indicated that the political fund-raising machinery was resilient enough to continue working amid a scandal that threatened to overturn the postwar order.

And the reported amount reflects only funds raised aboveboard--it doesn’t take into account the kind of underground money that went into political coffers in the Recruit case, when the upstart president of a large employment and real estate company attempted to buy influence among members of Parliament and high-level bureaucrats by offering unlisted stock.

The zeal displayed by prosecutors last year to root out political corruption from the stock market also appears much diminished. In a rare criminal case that could presage some reform of the largely unpoliced Tokyo stock market, Mitsuhiro Kotani, a speculator and reputed fund-raiser for former Prime Minister Yasuhiro Nakasone, was indicted along with an associate last month on charges of manipulating share prices.

But political overtones have been essentially absent from the fuss over Kotani, who reportedly belonged to one of Nakasone’s private fund-raising organizations at the time of his alleged involvement in a scheme to manipulate shares of Kokusai Kogyo, an aerial survey company, and Fujita Tourist Enterprises Co. Nor has the case unraveled into murky layers of the political world, as did Recruit.

A verdict in Kotani’s Tokyo District Court trial is scheduled for next Thursday.

Four brokerage firms implicated in the case had their wrists slapped by the Tokyo Stock Exchange and the Finance Ministry: Each was forced to pay a $3,650 fine and ordered to shut down for one to two days.

Nakasone remains an influential party boss, having been reelected to his Parliament seat and vindicated, along with the rest of the conservative Establishment, in February’s lower house election. Nakasone, Takeshita and nearly every ruling party elder were linked to unethical Recruit share-trading.

Yet, disgraced or not, Takeshita is still without question the most powerful political leader--Kaifu phones him almost daily for advice, insiders say. He ordinarily keeps a low profile, but on Thursday he will step out in the limelight to lead a delegation to Beijing.

Another Recruit scandal casualty, former Foreign Minister Shintaro Abe, also is enjoying a comeback. He is no longer discussed as a successor to Kaifu because of poor health, but he is assuming a prominent role in foreign policy. He, too, leaves Thursday, in his case for Moscow, at the head of a pack of Parliament members from his faction of the ruling party.