Scandals Reach New Lows With Japanese Public

Most Japanese bureaucrats are known for their conservative dress, measured opinions and proper decorum. But Katsutoshi Matsuo apparently had a much flashier side not appreciated by his Foreign Ministry colleagues.

In his free time, the 55-year-old diplomat allegedly spent millions of dollars on racehorses, lovers, ex-wives and a tony condominium using money embezzled from a secret government expense fund, according to Japanese media reports and a government report released Thursday.

This case is competing for headline space with the dealings of a quasi-governmental insurance company called KSD that also allegedly embezzled millions. The firm reportedly collected worker disability payments from small, struggling companies across Japan and used the funds to grease the palms of politicians.

The two scandals threaten to reach the highest levels of government at a time when approval ratings for the ruling Liberal Democratic Party, or LDP, are at record lows. And the staggering sums are being allegedly embezzled or misappropriated at a time when many ordinary Japanese are losing their jobs.

“I’m really upset,” said Michiko Shimizu, a 53-year-old Osaka homemaker. “This is our tax money earned through sweat and tears. This ministry guy then goes and buys racehorses on top of his [generous] salary? How can they spend our money this way?”

Evidence of widespread--and growing--corruption can be seen in other corners of Japanese society as well. Academic circles were recently rocked by the news that answers to the nation’s dental licensing exam were leaked in advance. Corporations continue to funnel millions of dollars into secret political slush funds, said Kansai University professor and shareholder activist Koji Morioka. And local and national police departments are reeling from a score of recent bribery, sexual harassment and child pornography scandals.

Behind the headlines, some even see a shift in the nature of Japanese corruption, further evidence that Japan’s social glue is losing its viscosity in the face of weak leadership and economic stagnation.

During Japan’s go-go years, most scandals involving the nation’s elite bureaucrats entailed misdeeds done to protect a ministry, policy or closely related company, analysts say. A growing number of recent cases--including Matsuo’s alleged embezzlement--involve individuals padding their own bank accounts.

“Previously, bureaucrats were the best and brightest, the sons and daughters of samurai who regarded honor and a frugal life as very important,” said Hiroshi Takaku, an independent political analyst. “Personal greed is at the root of this scandal, representing a huge loss of public trust.”

Details released about the Foreign Ministry scandal portray a capable official tempted by unfettered access to a huge pot of money.

In 1993, after nearly 30 years with the Foreign Ministry, Matsuo was given the job that would get him into trouble: He was put in charge of a secret Foreign Ministry fund used to cover intelligence activities and the expenses of Japan’s prime minister and other senior officials traveling abroad.

Matsuo reportedly had sole authority over the fund--which, in order to protect the confidentiality of the VIPs, could be tapped without any receipts or documentation. Between 1993 and 1999, according to the Foreign Ministry investigation, he diverted at least $4.8 million into various private bank accounts.

The lack of oversight reportedly allowed him to indulge his penchant for the finer things in life, including a $650,000 condominium in Tokyo, $350,000 he gave to a girlfriend and $175,000 he bestowed on one of his three ex-wives.

He also started collecting racehorses, a passion he reportedly inherited from his father. He eventually spent close to $1 million acquiring 14 of them, which he named after foreign universities, girlfriends and dance steps. They included Harvard Boy, Akemi Dandelion and Sound of Waltz.

With the release of its report Thursday, the Foreign Ministry fired Matsuo and referred the case to the police for criminal prosecution. It also vowed to overhaul its auditing system and curtail the use of secret funds. And Foreign Minister Yohei Kono, a prime ministerial hopeful, offered to give back six months of his own salary.

The LDP’s ability to weather a parliamentary election in July may depend on how well it can rev up its damage-control machine. The Foreign Ministry investigation covered only $470,000 in funds allegedly misappropriated between October 1997 and March 1999 out of the at least $4.8 million in question over a six-year period.

Investigators claim that they couldn’t track the rest of the money. And some of the funds are reportedly backed by credit card receipts, although it’s not clear whether these represent personal or official spending.

But analysts say the real problem is that the secret Foreign Ministry account is closely linked to another secret account used to cover Cabinet expenses--and that further revelations could prove politically explosive.

“The Foreign Ministry has concluded that most of the money [Matsuo] used is not from the Foreign Ministry’s secret fund, but from the Cabinet secretary’s secret fund,” potentially involving tens of millions of dollars, the Nikkei financial newspaper reported Thursday. “They are worried that flames will spread to the Cabinet over who bears responsibility.”

Opposition lawmakers and the media have called for a full investigation. “The whole thing is incredible,” said an editorial in the daily Asahi Shimbun newspaper. “Why are the funds confidential, anyway, if VIPs’ travel schedules are widely publicized?”

How much more is disclosed, however, will depend in part on how much the opposition is able to ferret out when parliament reopens Wednesday. In the past, corruption scandals often quickly threatened to engulf both sides of the aisle and various corners of the bureaucracy, blunting any real push for reform.

“You can count the number of clean politicians in Japan on both hands,” said Takayoshi Miyagawa, political analyst with the Center for Political Public Relations.

As Japan confronts a salad bowl of scandals, some wonder anew why voters here have put up with corruption for so long. While Japan passed an anti-graft law in November that carries stiffer penalties, many loopholes remain and the law won’t go into effect until late February.

Some, including 39-year-old illustrator Takashi Chiji, attribute the ennui to a deeply ingrained feeling in Japan that politics is corrupt anyway, doesn’t have much bearing on most people’s lives and can’t really be changed. Others, like Shohei Muta, senior program officer at the nonprofit Japan Center for International Exchange, cite Japan’s “gift-giving culture” and a widespread belief that a certain amount of lubrication is necessary to get anything done.

Yuichi Yoshikawa, a citizens activist and professor of politics at Keisen University, blames democracy’s and civic rights’ weak roots in Japan--a mere 50 years compared with centuries of feudalism that saw few checks on rulers. Still others cite the Japanese dislike of confrontation, which blunts oversight and all too often results in deals and compromises crafted in back rooms.

In the KSD scandal, meanwhile, several ruling party officials are accused of taking payoffs from the quasi-governmental insurer in exchange for helping expand the group’s empire. On Tuesday, LDP heavyweight Fukushiro Nukaga, state minister for economic and fiscal affairs, resigned for allegedly receiving $129,000 from the insurer. Nukaga, who denies any wrongdoing and says it was his secretary’s fault, quit less than two months after joining the Cabinet of gaffe-prone Prime Minister Yoshiro Mori. He’s the third Mori Cabinet member to quit under a cloud in nine months.

The prime minister and other senior party officials have come under fire for knowing about Nukaga’s links to the insurer and appointing him to the Cabinet nonetheless. Another big fish, senior LDP lawmaker Masakuni Murakami, allegedly received $430,000 from the insurer. And rumors are swirling that several senior LDP members could be charged.

“There’s a tremendous gap between the skewed world view that seems to prevail in Nagatacho, the nation’s political center, and the general public’s common sense,” said an editorial in the Yomiuri Shimbun newspaper. “Lawmakers must make an all-out effort to drastically reform politics and regain the public trust.”