Ex-Japan Official Charged With Tax Evasion

Japanese prosecutors indicted a former Cabinet minister Thursday on tax evasion charges related to alleged stock speculation, threatening to hobble the ruling Liberal Democratic Party with yet another political fund-raising scandal.

Indicted but not taken into custody was Toshiyuki Inamura, 55. He was charged with evading income taxes on about $20 million in profits from stock transactions between 1986 and 1988.

Inamura’s family physician, Akiyuki Yamaguchi, also was indicted in the case, which has ties to a major stock manipulation trial now under way in Tokyo District Court and to the political machine of former Prime Minister Yasuhiro Nakasone.

It was not immediately clear whether the charges against Inamura would presage the kind of sweeping investigation of political fund-raising that rocked the political world two years ago in the Recruit Co. corruption scandal, a shares-for-influence case in which nearly all the ruling party leaders, including Nakasone, were implicated.

But even if the probe remains limited, Inamura is accused of a pattern of financial dealings that typify the dirty fund-raising techniques brought to light in the Recruit scandal. Japanese lawmakers customarily make ethically questionable investments in specially traded “political stocks” to pay for their campaigns.

Revelations of shady insider trading in shares of a Recruit Co. subsidiary sparked widespread public outrage and cost the Liberal Democrats their majority in the upper house of Parliament last year. A total of 16 politicians, bureaucrats and businessmen were indicted in the Recruit case.

On Tuesday, Liberal Democratic Party policy-makers proposed a long-awaited plan for electoral reform that would combat corruption by increasing the number of single-seat constituencies in Parliament. In theory, this would suppress intraparty factional rivalries, which supposedly drive up the cost of political campaigns and therefore breed unethical behavior.

Opposition parties denounced the plan as serving the Liberal Democrats’ interests, and even the cautious Japan Times labeled the proposal in an editorial Thursday as “halfhearted reform.”

Prime Minister Toshiki Kaifu, meanwhile, is under increasing pressure from party bosses to reshuffle his Cabinet to give greater representation to members of the various rival party factions. Kaifu could announce a new lineup as early as this weekend, but Inamura’s indictment is expected to delay his decision. It may also strengthen the prime minister’s hand in his efforts to bar from his Cabinet politicians tainted by corruption.

Specifically, Inamura is charged with evading $12.5 million in income taxes relating to profits he made investing in the stock market through the Koshin Group, a band of speculators headed by Mitsuhiro Kotani, who is now on trial accused of manipulating stock prices. Kotani is reputed to have headed one of Nakasone’s fund-raising organizations during part of the period in which he is accused of manipulating share prices.

Inamura, a 21-year veteran of Parliament from Tochigi prefecture (state), was a member of Nakasone’s political faction until he resigned from the ruling party Wednesday. He was director general of the Environment Agency from 1986 to 1987, under Nakasone’s administration.

Nakasone nominally resigned from the party after he was disgraced--but not charged with criminal wrongdoing--in the Recruit scandal. He was reelected to Parliament in February, however.