Japan Kingpin Gets Second Indictment

Climaxing an unprecedented drive against a political kingpin, prosecutors Saturday indicted the man credited with picking three of Japan’s last four prime ministers on tax-evasion charges that could subject him to $18.3 million in fines if convicted.

It was the second indictment against Shin Kanemaru, 78, and came as reverberations continued to spread through Japan’s construction, banking, cement and transportation industries--all of which are suspected of helping the former vice president of the governing Liberal Democratic Party amass a personal fortune estimated at $58 million.

Justice Minister Masaharu Gotoda said the action concluded “the main portion” of tax-evasion charges against Kanemaru and his former secretary, Masahisa Haibara, 49, who could face fines of $5.6 million. The possible penalties for the two of $23.9 million exceed the combined $19.2 million in income they were accused of colluding to conceal between 1987 and 1991.

Both men could also be jailed for up to five years if found guilty.

Kanemaru, who resigned his ruling party post and later his seat in Parliament last year in a scandal involving a gang-tainted parcel delivery service, is expected to ask the Tokyo District Court on Monday to release him on bail. He was arrested on the tax-evasion charges and jailed March 6.

Prosecutors are expected to continue investigations of executives of construction firms, cement companies and a bus company who are suspected of making illicit payments to Kanemaru, as well as executives of three banks and a securities firm suspected of helping Kanemaru hide a $38.5-million chunk of his fortune. Since the former kingpin was arrested, prosecutors have raided more than 100 offices and seized materials that fill 900 cardboard boxes.

Executives of two of the banks and the securities company have been ordered to testify in Parliament next Thursday.

“Never has there been an incident in which the hidden structure of the ruling party has been brought out into the open like this one,” Prof. Takeshi Sasaki of Tokyo University said in a television interview.

The case was also unprecedented in that prosecutors delved into a politician’s entire fortune, not just specific illicit payments.

The scandal also destroyed the credibility of longstanding claims by political leaders that large amounts of money are needed to conduct political activities. The treasure of bank debentures, cash and gold bars that prosecutors found in safes in Kanemaru’s home and office represented assets left over after political expenditures.

Although no other formal charges have yet been filed, prosecutors leaked to Japanese reporters accusations that 18 nationwide construction companies regularly sent payments to Kanemaru when they received a contract for a major public works project and sent twice-a-year “gifts” at New Year’s and the summer Obon, or ancestor worship, season.

Construction firms and cement companies in Kanemaru’s former constituency in Yamanashi prefecture made payments continuously, in the form of dues collected by the local industry associations.

The disclosures aroused such strong public reaction that Construction Minister Kishiro Nakamura ordered his ministry to work out reforms in the system of accepting bids for public works.