A Japanese Career Path Gets Rocky

Etsuko Kawada’s anguished plea cut through the news conference platitudes like a knife.

“Stop reading from that paper and make an apology from your heart!” she demanded.

The fiercely determined middle-aged mother was speaking to several executives of Green Cross Corp., a prominent pharmaceutical firm that had knowingly sold blood products contaminated with the virus that causes AIDS. The company had summoned journalists to announce a settlement with hundreds of victims.

Kawada persisted: “Do you understand the feelings of my son, who is dying from injections of poisonous medicine?”

The chastened executives set aside their prepared statement, walked around a table to face an assemblage of victims and relatives, dropped to their knees and touched their foreheads to the floor in a gesture of deep humiliation and apology.

The televised scene last year electrified Japan, and the repercussions are still being felt.

After all, the former top executive at Green Cross had come from the Health and Welfare Ministry, where he headed the agency responsible for blood-product safety.

That is an all-too-common career path here.

The tainted blood case, together with other recent scandals, has triggered unprecedented public anger against one of Japan’s most important social and economic institutions: the tradition by which top government officials retire into powerful, or at least cushy, jobs in the private and quasi-public sectors.

The sins of this practice--dubbed amakudari, or “descent from heaven”--seem to pop up wherever there is serious trouble in Japan these days:

* Former Finance Ministry bureaucrats who moved into top executive positions at housing finance firms played key roles in an industry collapse that cost taxpayers $5.4 billion.

* A complex and deep-rooted trade dispute with the United States over Japanese port practices involves former Transport Ministry bureaucrats.

* An explosion last month at a nuclear-fuel reprocessing plant, and a cover-up of botched firefighting efforts, has brought scathing criticism of the former bureaucrats who hold key posts at that facility.

In the blood scandal, which has already seen the deaths from AIDS of more than 450 hemophiliacs, the spotlight fell on former bureaucrats after the arrest of Renzo Matsushita, 76, in September.

The head of Green Cross in the mid-1980s, when it sold unheated blood products that carried the virus that causes AIDS, he was no ordinary businessman who climbed the corporate ladder.

The fact that his first career was spent at the Health Ministry’s pharmaceutical affairs bureau gave his arrest--and his recent guilty plea to a charge of “professional negligence”--a particularly powerful impact.

The commotion about amakudari has occurred not just because some former elite bureaucrats have failed spectacularly in their new jobs. Many Japanese charge that in these recent scandals, the bureaucrats responsible for oversight neglected their duties partly because they were keeping one eye on their own future job prospects.

The word amakudari itself reflects the exalted status bureaucrats have traditionally held in Japan: The implication is that government ministries are all-powerful “heavenly” places from which a bureaucrat can “descend” to become, say, a bank president, rather than having to climb a corporate ladder as mortals must. It only adds to the term’s resonance that deities in Japanese mythology descended from heaven to create and inhabit the country.

Amakudari played a major role in the nation’s postwar economic miracle by enabling government and business to work hand in hand as “Japan Inc.” But while it has always provoked a degree of criticism and envy, the recent string of problems has left it under attack as never before.

The practice has emerged not only as the source of domestic scandal but also as a sore point in U.S.-Japanese trade relations. It is seen as one of the obstacles to making Japan an easier place for foreigners to do business.

“Amakudari essentially is one of the reasons that we have difficulty getting bureaucrats to agree to deregulate,” said Lawrence Greenwood, an economics official at the U.S. Embassy in Tokyo.

In the dispute over the way incoming cargo is handled at Japanese ports, the Japan Harbor Transport Assn. is a key player--and it is one of the organizations that accepts former bureaucrats through amakudari, Greenwood said.

“There are not too many incentives for the bureaucrats to change the regulations if in fact that means there’ll be fewer amakudari positions open to them later on.”

The beneficiaries of amakudari generally are unapologetic about it, arguing that a highly attractive second career is one of the legitimate rewards of a relatively poorly paid government career.

In the United States, of course, people move from government to private jobs, sometimes with controversy. But for Americans, this route is a two-way street. And with greater turnover in the upper echelons of the U.S. federal bureaucracy than exists in Japan, those who quit the U.S. government are less likely to have decades-old ties with the bureaucrats they leave behind.

In Japan, where promotions through government bureaucracies are based on a rigid seniority system, those who “descend from heaven” typically have spent 30 years building up connections in a single ministry--ties that inevitably influence their later dealings with the government.

This opens the door to mutual back scratching on such a grand scale that bureaucrats are required to wait two years after leaving a ministry before taking a job in a private firm regulated by that ministry. They typically pass that time in a comfortable sinecure at a quasi-public organization associated with the ministry.

Once bureaucrats of any rank move into amakudari positions, they routinely serve their new employers by helping them cope with the myriad regulations that their former colleagues are in charge of enforcing. In Japan, regulations typically are vague, leaving enormous discretionary power to bureaucrats, who wield enormous power anyway.

In practice, they can use that power to reward companies that please them and to punish those that don’t.

Occasionally, businesspeople stick their necks out and fight back. One is Masao Ogura, a prominent critic of amakudari who formerly was president of Yamato Transport Co., where he sometimes got his way by suing Transport Ministry bureaucrats or attacking them in newspaper ads.

Ogura said he agrees with American complaints.

“What the United States is angry about is that Japanese regulations are unfair and opaque,” he said. “Decisions are always made by the bureaucrats’ subjective judgment.”

But most companies play the bureaucrats’ game--and that includes offering amakudari posts, critics of the system say.

And that is the backdrop for the explosive charges in the bad-blood scandal.

Japan was not alone in moving too slowly to prevent the infection of many hemophiliacs with the AIDS virus. Because they need special products to make their blood clot, hemophiliacs were especially vulnerable to the disease until safe, heat-treated blood products were developed in the mid-1980s.

One of the major allegations in the Japanese scandal is that to prevent firms such as Green Cross from losing business, bureaucrats blocked the import of heat-treated American products until Japanese manufacturers could develop competitive technology. Meanwhile, imports continued of unheated U.S. products, which already had ministry approval but eventually proved to be a major cause of AIDS among hemophiliacs.

Green Cross at that time was Japan’s biggest supplier of unheated products, which were made partly from imported U.S. blood. Prosecutors have accused it of continuing to sell its risky products in order to maximize profits even after it knew that safer alternatives were available.

In both the AIDS and the multibillion-dollar housing finance scandals, regulatory officials at the relevant ministries “couldn’t take quick action to solve these problems because they put priority on securing and maintaining amakudari jobs for themselves,” charged Surugadai University law professor Norihiko Narita. “Securing amakudari jobs has become their primary motivation.”

A series of trials that started last month focuses on patients who were infected after safe products were already in wide use in the United States.

The defendants include hemophilia specialist Takeshi Abe, 80, a doctor who played a key role in setting government policy, and former Health Ministry official Akihito Matsumura, 55. Prosecutors charged at the first day of Matsumura’s trial that he “tried to avoid recalling [unheated] products because it would have placed a financial burden on pharmaceutical companies.”

In the opening session of a third trial, Matsushita and two of his successors pleaded guilty to professional negligence charges in the 1995 death of a patient who received tainted blood-clotting agents in April 1986.

Prosecutors said Matsushita had approved Green Cross advertising in 1985 that falsely claimed its unheated blood products were made solely from domestic plasma--implying that the products were safe because AIDS was still extremely rare in Japan at the time.

At the time of its apology last year, Green Cross joined with two other Japanese firms, a German firm, the U.S. company Baxter International Inc. and the Japanese government in reaching a settlement with 400 infected hemophiliacs. Each victim won a lump sum payment of $357,000, with additional $1,190 monthly payments to those who developed AIDS.

In the current atmosphere, amakudari becomes an issue even in cases where in the past it would have been ignored. After an explosion last month at a nuclear-fuel reprocessing plant, Asahi Shimbun, a leading newspaper, criticized the plant’s top officials under the headline: “Even Crisis Management Left to Subcontractors. Half the Board Members Were Amakudari.”

Increasingly resentful of amakudari, Japan’s top business leaders have established a task force to try to reform the practice.

Companies hire bureaucrats into amakudari positions “because they’re afraid,” declared Atsushi Hama, who heads the task force at the Federation of Economic Organizations, Japan’s most influential business group.

The “ultimate solution,” he added, “is to cut down the amount of unclear discretion bureaucrats have, which causes this fear among companies, . . . to push deregulation further and to get rid of heavy administrative controls on the private sector.”

Not all businesses oppose amakudari, however. Many benefit from close ties with government bureaucracies and the coziness of regulations, which tend to limit competition and protect the status quo. The business federation itself cannot even agree whether it favors or opposes amakudari.

Defenders of the system argue that it is legitimate, at least in the many cases where bureaucrats are qualified for their second careers.

Soroku Yamagata, 78, a medical doctor, says he could have earned far more money as a practicing physician than he did as a Health Ministry bureaucrat. But he was attracted to a government job by the opportunity to do research.

“I had a low salary and lots of work,” Yamagata said. “It was very difficult.”

After retirement, Yamagata became director general of the Japan Medical Assn. “Oh, my salary was so huge!” he recalled with a laugh.

He now heads a foundation working for AIDS prevention but has started looking for an amakudari recruit to take his place.

“I can’t say it’s a bad thing,” he said. “Those people have a lot of experience. Although lately there are some bureaucrats who are hungry for money, there are also many excellent bureaucrats.”

Indeed, despite all the anger, few believe that amakudari faces collapse any time soon.

“The system is so solid that it won’t change too easily,” said Muneyuki Shindo, professor of administrative law at Rikkyo University. “Rather, the government won’t be able to recruit well-qualified bureaucrats if they stop amakudari.”

Said an American here who is a longtime observer of Japan’s bureaucratic traditions:

“The bureaucrats aren’t going to abolish their retirement system. It’s like telling the fox to build a better henhouse.”

Chiaki Kitada of The Times’ Tokyo Bureau contributed to this report.