In New Japan Corruption Scandal, Official Quits Amid Bribery Charges

Japan’s bureaucratic elite reeled from another major corruption scandal Tuesday as a senior official resigned amid charges he had accepted hundreds of thousands of dollars in kickbacks, a golf club membership and use of a luxury car from a nursing home operator.

In terms of taxpayer yen squandered, this scandal is by no means the largest to have rocked Japan in recent years. But its timing could not be worse, for it follows a parliamentary election campaign in which every political party promised to curb the powers of the overreaching Japanese bureaucracy and thus weaken the corrupt ties that bind bureaucrats, politicians and industry in an “iron triangle.”

Prime Minister Ryutaro Hashimoto was told of the resignation of Nobuhara Okamitsu, the No. 2 official in the Health Ministry, on the day when a newly appointed blue-ribbon panel began work on reforming Japan’s administrative system by the year 2001. Hashimoto has made deregulation and reform a cornerstone of his second term.

But there is widespread skepticism about how much he can accomplish.

“If this incident really happened, public distrust of the bureaucrats will hit a peak,” an angry-looking Hashimoto said on national television. “It further demonstrates the gravity of the need for administrative reform.”

The opposition New Frontier Party immediately vowed to take up the scandal in the new parliament.

On Monday, police arrested the nursing home operator, Hiroshi Koyama, 51, chairman of the Aya Fukushi Group, and a former Health and Welfare Ministry official, Shigeru Chatani, 39. Koyama is accused of giving Chatani and his wife more than $27,000 in bribes and “consultant fees” in exchange for lucrative government subsidies to his nursing homes.

Faced with a rapidly growing population of elderly, the Japanese government has been trying to increase the number of facilities to care for the aged; once the government approves a project, national and local subsidies cover 75% of the cost of building private nursing homes. Generous subsidies continue once a facility opens.

Koyama, a former political aide and Liberal Democratic Party member, turned to the nursing home business after an unsuccessful 1990 run for a seat in parliament. He has won official approval to build eight nursing homes in two prefectures (states) and collected at least $4.5 million in government subsidies since 1993, according to news reports.

Police also suspect that Okamitsu, administrative vice minister of the health department, accepted more than $540,000 in cash from Koyama, as well as a golf club membership worth $113,000 and use of a luxury car. He resigned Tuesday morning, saying he did not want to “cause the ministry trouble.” He has not been charged.

Okamitsu has denied taking the cash or the golf club membership, though police reportedly have documents showing the civil servant paid cash for a $675,000 apartment and played golf with Koyama at a club where a membership was purchased in Okamitsu’s name. Okamitsu, a graduate of the prestigious law faculty at Tokyo University, has admitted to having “borrowed” the car, saying, “I was careless.”

The Health Ministry has been held up as Exhibit A of Japanese bureaucracy’s coddling industry at public peril ever since revelations that its officials let Japanese pharmaceutical companies keep selling unheated blood products even after it was known that they could transmit the virus that causes AIDS--and even though safer alternatives were available. As a result, about 1,800 Japanese hemophiliacs were infected with HIV. Last month, a Health Ministry official was arrested on charges of criminal negligence in connection with that case.

Many other ministries and agencies have also been afflicted of late by brazen bureaucratic malfeasance.

For example, an elite Finance Ministry official was found last year to have accepted cash and low-interest loans from a financial organization he was supposed to be supervising; another did an insider stock deal in his daughter’s name. In January, an administrator in the Finance Ministry had to resign after it was learned that his subordinates had been “overly entertained” by companies they regulated.

A key Tokyo city bureaucrat lost his job after hopping aboard a corporate jet for a vacation in Hong Kong, and a manager at the National Tax Agency was caught “borrowing” a cellular telephone from a life insurance company that also paid his phone bills for nearly two years.

“The bureaucrats feel unassailable,” said Hiroshi Kato, professor emeritus of economics at Keio University. “They think they can get away with anything,” and Hashimoto’s threats of reform are not being taken seriously enough, he said.

But political analyst Norihiko Narita said the nursing home scandal gives Hashimoto just the opening he needs to attack the bureaucrats while they are on the defensive, and push through reforms.