Bribery Case Quells Japan’s Hopes of Reform

Ryutaro Hashimoto was having a distinctly bad day.

The prime minister summoned his new health and welfare minister to his residence Thursday and ordered him to “reinstate discipline” at the scandal-racked ministry.

Less than a month after winning an election fought on promises to reform the Japanese bureaucracy, Hashimoto was furious over embarrassing allegations that a nursing home operator had bribed key Health Ministry officials to snag about $4.5 million in government subsidies.

Next, Hashimoto made a surprise appearance at the weekly conclave of Japan’s top bureaucrats, the administrative vice ministers who hold the No. 2 positions in each ministry but who often wield more power than the ministers they “serve.”

“I feel very angry” about the bribery scandal, Hashimoto said, demanding an end to the scandals that seem to break over the bureaucrats’ capital of Kasumigaseki as often as the storms that drench Tokyo during typhoon season.

“We should be ashamed of ourselves to have to order such a thing,” Hashimoto reportedly told them.

The prime minister then returned to his office, whereupon the afternoon news brought the bombshell that Hashimoto’s own political organizations had accepted $63,000 in contributions from the nursing home operator who had been arrested on bribery charges three days earlier.

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The bribery scandal, and the news that yet another Japanese prime minister had received generous and perfectly legal political donations from an alleged criminal, has deflated hopes that Hashimoto’s new government can make good on its reform promises. Instead, the scandal has reinforced the cynical and widely held view that corruption is an inescapable byproduct of the cozy relations among business people, bureaucrats and politicians.

On the streets of Tokyo on Friday, no one even pretended to be shocked by the revelations that nursing home developer Hiroshi Koyama had handed out more than $1 million in contributions to Hashimoto and 18 other politicians.

Although the feeble opposition has promised to launch an inquiry into the Health Ministry scandals, no one has demanded that Hashimoto give back his 7 million yen ($63,000).

“Seven million yen? Hah! I bet there are really two more zeros attached,” scoffed a middle-aged bookseller. “That’s the way of the political world; there’s nothing you can do about it. As long as Japan is doing OK, who cares?” he said.

The donations to Hashimoto were legal and properly reported. But they make it more difficult for the prime minister to throw stones. Political analyst Minoru Morita said Hashimoto is likely to escape this scandal unscathed because the Japanese establishment is exhausted after three years of political turmoil and desperate for the stability Hashimoto offers.

“If he is wounded, the chaos will be endless, and there isn’t an obvious successor,” Morita said. “So both the politicians and the bureaucrats will probably protect Hashimoto with all their might.”

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The chairman of the National Citizens’ Ombudsman Coalition, which has been trying to force Japanese local and national governments to make public records of how taxpayer dollars are spent, argued that the scandal is further evidence of the need to ban corporate contributions to politicians.

“Political donations are a loose form of bribery,” said attorney Toshiaki Takahashi, who called on Hashimoto to set an example for other politicians and bureaucrats by refusing them.

One obstacle to such radical reform is the Japanese public’s profound sense of impotence in the face of what appears to be institutionalized corruption among Japan’s best and brightest, the Tokyo University-educated elite who are credited with managing Japan into an economic superstar.

“Of course [bribery] is bad. But it happens so often I’m not surprised,” said Mayumi Kawamura, a 35-year-old employee of a company she declined to name. “It’s just like Italy, with money moving behind the scenes. Until the system changes, these scandals will never end.”

Despite Japan’s staggering economic successes, lately its political system is being compared with Italy’s.

In a front-page story in the English-language Japan Times earlier this month, former Italian diplomat Sergio Romano argued that both ancient cultures shared humiliating defeat in World War II followed by strongly authoritarian regimes that produced economic “miracles.” But both have suffered from systemic political paralysis, organized crime and the erosion of traditional values.

“Like Italy, Japan has discovered, after a number of shocking scandals, that corruption is a permanent feature of social and political life,” Romano wrote.

Keio University economist Hiroya Ichikawa argued that scandals will be endless as long as poorly paid bureaucrats have the sole authority to dispense lucrative licenses, contracts and permissions.

Hashimoto has promised deregulation--which would presumably lessen the need for industry to grease bureaucrats and politicians for favors--but there is widespread skepticism that his changes will be more than cosmetic. The Finance Ministry, one of the first targets of reform, is frantically maneuvering to try to defeat a plan to curb its regulatory powers.

“Mr. Hashimoto will find it very difficult to reform the government,” Ichikawa predicted. “There are just so many vested interests against this.”

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The nursing home scandal appears to be a textbook study in how quickly interests become vested when billions of yen begin flowing.

Koyama, the nursing home developer, learned his way around Japanese politics as a secretary to a Liberal Democratic Party politician. After losing an LDP-backed bid for a seat in parliament in 1990, he plied his political connections to make money in the booming field of elderly care.

Koyama apparently set out to buy political goodwill with nearly every politician who has close ties to the Health Ministry. According to one newspaper, the Mainichi Shimbun, since 1993 he has contributed more than $1 million to 19 politicians, including Hashimoto, new Health Minister Junichiro Koizumi, former Minister Keigo Ouchi and three other key lawmakers who previously worked in the ministry. He also reportedly entertained lavishly.

Meanwhile, Koyama allegedly plied two ministry officials with cash, luxury cars, golf club memberships and overseas vacations, according to police and press reports.

It worked. Koyama’s Aya Welfare Group won permission to build eight nursing homes, earning at least $4.5 million in government subsidies.

Koyama also set up a construction company, the J.W.M. Co., to build the nursing homes. But according to Japanese press reports, J.W.M. farmed the construction work out to subcontractors--raising suspicions that its bids may have been padded.

J.W.M. in turn set up two political groups, the Japan Hospital Bedclothes Assn. and the Japan Medical Meals Assn., which made the political donations.

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Besides the nursing home bribery case, Japan’s medical establishment is involved in two other scandals that have seriously eroded public trust.

In one case, the Health Ministry continued to allow a pharmaceutical company to sell unheated blood products even after both the company and the regulators learned that such products could transmit the virus that causes AIDS--and even though safer, heated products were widely available. About 1,800 Japanese hemophiliacs were infected.

In the latest scandal, prosecutors Thursday arrested a doctor at prestigious Kyoto University Hospital and three drug company employees on charges that the doctor had accepted bribes to certify to the Health Ministry that the company’s drug to treat dystonia was safe. Prosecutors allege the doctor received $72,000 in bribes from Allergan K.K., a marketing unit of the U.S. pharmaceutical company Allergan Humphrey.