JAPAN : Finance Minister Moves Closer to a Resignation : Aide’s shady deals broaden the scandal that began with stockbrokerage payments to major customers.
It has become increasingly clear in recent days that Finance Minister Ryutaro Hashimoto will resign within the next month to take responsibility for a broadening financial scandal in which his own secretary has been implicated.
The secretary resigned last Saturday after admitting that he had introduced three of Hashimoto’s friends to a Fuji Bank executive who issued them fake deposit certificates. The certificates were used by Hashimoto’s friends as collateral to obtain about $10 million in loans.
Political observers say that even before news of his secretary’s questionable dealings was reported, Hashimoto had considered resigning over a larger scandal involving the stock market.
In that controversy, securities companies paid $1.3 billion to favored customers to compensate them for their losses on the market. The payments have been widely seen here and abroad as a sign that Japan’s market is rigged in favor of wealthy investors.
After the Yomiuri Shimbun published a front-page story Tuesday quoting anonymous Liberal Democratic Party leaders predicting Hashimoto’s resignation, several members of the ruling party have made public statements that suggest the leadership is pressing him to stay on against his wishes.
“Just quitting is not enough,” Shin Kanemaru, a leading member of the party faction to which Hashimoto belongs, said Thursday at a meeting of the faction. “He should finish the job of implementing reforms to make sure it doesn’t happen again and then make his own decision” about resignation.
A quick resignation would have spared Hashimoto the embarrassment that he is now facing, as he is forced to respond daily to charges from opposition members of Parliament. The once self-assured, almost arrogant minister has occasionally appeared close to tears, his words catching in his throat, as he repeatedly apologized before the Parliament and promised to reform the industry.
Hashimoto proposed legislation Wednesday that would make compensating customers for stock market losses a criminal offense punishable by up to three years in prison and $24,000 in fines. He is also expected to propose creating a special regulatory body within the Ministry of Finance to watch the industry more closely.
Prime Minister Toshiki Kaifu has asked a government committee to look into the possibility of creating an independent watchdog organization like the U.S. Securities and Exchange Commission.
By remaining in office, Hashimoto has left himself open to be the target of Japan’s weeklies and tabloids. Weeklies promise in their subway advertisements to expose details of Hashimoto’s sex life. The Fuji evening news reported Thursday that a restaurant owner for whom Hashimoto’s secretary arranged a large loan is a woman Hashimoto has known since she was a Ginza bar hostess.
According to the paper, the woman now lives in high style: She drives a Mercedes-Benz sports car, has an expensive condo in downtown Tokyo and entertains top politicians and financial industry executives.
Pundits are divided on whether Hashimoto’s resignation would help Kaifu’s chances for reelection as party leader in October. Hashimoto was a leading rival before he became entangled in the scandal, and now some political observers argue that his resignation and Kaifu’s own “clean” image will boost the prime minister.
However, Hiroshi Mitsuzuka, leader of another faction of the ruling party and also one of Kaifu’s rivals, told the Kyodo News Service on Thursday that Kaifu “wouldn’t be exempt” from having to take responsibility for the scandal. Since Hashimoto is one of Kaifu’s top Cabinet members, Mitsuzuka argued, “in a sense they are in it together.”