Political Corruption and Scandals in Japan

By Matthew M. Carlson and Steven R. Reed

Combining history with comparative politics, Matthew M. Carlson and Steven R. Reed take on political corruption and scandals, and the reforms designed to counter them, in post–World War II Japan.

Political Corruption and Scandals in Japan makes sense of the scandals that have plagued Japanese politics for more than half a century and attempts to show how reforms have evolved to counter the problems. What causes political corruption to become more or less serious over time? they ask. The authors examine major political corruption scandals beginning with the early postwar period until the present day as one way to make sense of how the nature of corruption changes over time. They also consider bureaucratic corruption and scandals, violations of electoral law, sex scandals, and campaign finance regulations and scandals.

In the end, Carlson and Reed write, though Japanese politics still experiences periodic scandals, the political reforms of 1994 have significantly reduced the levels of political corruption. The basic message is that reform can reduce corruption. The causes and consequences of political corruption in Japan, they suggest, are much like those in other consolidated democracies.

• Language: English
• Publisher: Cornell University Press
• Release date: Mar 15, 2018
• ISBN: 9781501715662

Book preview

POLITICAL CORRUPTION AND SCANDALS IN JAPAN

Matthew M. Carlson and Steven R. Reed

CORNELL UNIVERSITY PRESS ITHACA AND LONDON

Contents

List of Figures and Tables

List of Abbreviations

Introduction

1. Understanding Corruption in Japanese Politics

2. Scandals in Early Postwar Japan, 1948–1978

3. Scandals and Reform, 1979–2001

4. Scandals and Reform, 2002–2016

5. Bureaucratic Corruption and Political Scandals

6. Sex and Campaign Finance Scandals

7. Election Law Violations as Political Corruption

Conclusion

Acknowledgments

Appendixes

A. Yen Exchange Rate per 1 U.S. Dollar, 1950–2016

B. Prime Ministers of Japan after 1945

C. Asahi’s Investigation into Election Violations in the 1960s

References

Index

Figures and Tables

Figures

7.1 Number of election law violators in Japan’s lower house, 1946–2014

7.2 Number of election law violators in the national and prefectural districts, 1950–1980

Tables

2.1 Bribery prosecutions in Japan’s parliament after 1948

3.1 Number of politicians linked to major corruption scandals

7.1 Japan’s electoral systems from more to less candidate-centered

A Note on Proper Names and Transliteration

We present the names for all Japanese politicians and bureaucrats as family name followed by given name. Japanese words are spelled with elongated sounds as would be necessary to produce the correct characters on a Japanese word processor. We made a few exceptions for common English renderings (i.e., Tokyo, Hokkaido, Hyogo, Kobe, and Komeito) and names of some Japanese scholars.

List of Abbreviations

Introduction

POLITICAL CORRUPTION AND SCANDALS IN POSTWAR JAPAN

Though political corruption plagues many nation-states, most observers believe that an especially virulent form of the disease infects Japan, and that the Yamato [Japanese] strain of the malady is especially resistant to treatment.

David T. Johnson, Why the Wicked Sleep

Japan has experienced serious problems with political corruption. Major corruption scandals impacted national elections in 1949, 1955, 1967, 1976, 1990, and 1993. To mention only the most serious cases, in 1976 Prime Minister Tanaka Kakuei was implicated in a bribery scandal that involved the purchase of airplanes built by Lockheed, the American aerospace company. Tanaka was paid off for his efforts in making the deal in the form of several cash-stuffed cardboard boxes delivered to his private residence. He resigned as prime minister and was later convicted. In 1989 Recruit, a corporation originally based on a magazine for job advertisements, distributed stock market profits to influential people to purchase future access to the policymaking process. After it became known that Prime Minister Takeshita Noboru accepted stocks, donations, and huge loans, he also resigned from office. Finally, in 1992 Japan’s largest parcel delivery company, Sagawa Kyuubin, donated large sums to top-ranking politicians, most notably to power broker Kanemaru Shin. Investigators uncovered a hoard of bank bonds, stock certificates, cash, and 220 pounds of gold bars in Kanemaru’s homes and offices.

The political corruption that surfaced during this era was clearly serious, but there are reasons to believe that it was much worse than it looked. None of the following institutions—police, prosecutors, national press, or opposition parties—were effective in curbing corruption. In the Lockheed case, U.S. reporters provided the only investigative journalism. In the Lockheed, Recruit, and Sagawa cases, legal authorities prosecuted these cases aggressively after the facts had come to light but did not actively investigate political corruption, discovering it only accidentally during other inquiries. The establishment press reported extensively on cases being investigated or prosecuted but failed to play a proactive role in uncovering corruption. The opposition parties exploited scandals when they occurred but also played a passive role in exposing them. No one was actively investigating political corruption but, whenever the public was provided with a peek under the cover of secrecy, they were astounded by what they saw. One can only suppose that more proactive or even more systematic efforts by legal authorities, the mass media, or the opposition parties to investigate corruption would have generated many more scandals and revealed much more corruption in Japanese politics.

Finally, elections proved an ineffective tool for controlling corruption. Despite being repeatedly involved in serious corruption scandals, the Liberal Democratic Party (LDP) maintained control of the government between its founding in 1955 and its first loss in 1993. The LDP did lose votes whenever a scandal was reported, but whenever voters were angry with the government, they faced an unattractive set of alternatives. The opposition was divided and incapable of presenting voters with a clear alternative to the LDP government. Many voters preferred to choose from among the several LDP or LDP-leaning independent candidates that competed against each other in the multimember districts (MMDs) used during that period. If one of the LDP candidates were tainted by a scandal, the voter might vote for a cleaner LDP candidate to replace the dirty one, but that would not result in a defeat for the governing LDP. The best explanation why the LDP survived many major scandals for such a long time is the paucity of alternatives, not the lack of voter concern with corruption.

Note that both LDP predominance and the divided opposition were caused, in part, by an electoral system based on MMDs that forced larger parties (primarily the LDP) to run more than one candidate per district. When more than one candidate from the same party (copartisans) competes in the same district, voters cannot choose from among them based on party identification or party platform. Such intraparty competition has been linked to corruption in several different ways, most clearly with the violation of election laws.¹

The fundamental problem with intraparty competition is that candidates from the same party cannot compete on their party’s policy or their party leader’s popularity. They must find something else to compete on and that something else tends to be constituency service. Because the party in power has access to the governmental resources necessary to provide such services, interparty competition advantages the party in power, reducing the probability of alternation in power. If constituency service extends to funneling government money into the district, it leads to clientelism, campaigns based not on policies for the nation but on providing particularistic benefits to specific groups or areas (Scheiner 2006, 69–73).

As this chapter’s epigraph suggests, there was also extreme pessimism about the prospects for bringing political corruption in Japan under control. Reforms were periodically proposed but seldom enacted. Those that were enacted were watered down and ineffective. Similar problems resurfaced repeatedly, including bribery, embezzlement, bid rigging, fraud, the misuse of public funds, vote buying, and tax evasion. There was bid rigging in local government construction projects, slush fund scandals that implicated local governments and police departments, as well as countless politicians who were investigated and indicted for election violations such as vote buying. Major scandals were followed by new ones in what seemed to be a never-ending cycle.

Though pessimism was clearly justified, the Recruit and Sagawa scandals, along with the founding of three new reform parties, helped push the long-ruling LDP out of power in the 1993 election. A coalition government that excluded only the LDP and the Japan Communist Party (JCP) passed a significant political reform package. The 1994 reforms included the introduction of a new electoral system, public funding for political parties, and changes to the campaign finance system. In this book, we argue that the political reforms of 1994 have produced a significant reduction in corruption and have transformed Japanese politics in many other significant ways. No one, including ourselves, expected the reforms to work. Early evaluations were uniformly negative but, as time passed, evaluations improved.² We have come to more optimistic conclusions than the studies that preceded ours. We argue first that the reforms have functioned in Japan much as they have in other countries and second that the reforms have reduced the levels of political corruption in Japan.

It is not that corruption scandals have disappeared from the headlines since the 1994 reforms. Quite the contrary, corruption receives more and more consistent coverage compared to the episodic coverage that characterized reporting before them. Changes induced by the reforms, especially the enhanced transparency introduced into political finance, provided police and prosecutors with more tools to combat corruption. The mass media has responded enthusiastically, reporting on any scandal or potential scandal. Finally, political parties have energetically used the new transparency to generate scandals. This was especially the case between 2003 and 2012, when the party system centered on competition between two parties, the LDP and the Democratic Party of Japan (DPJ). Although the new system is far from perfect, it controls political corruption much better than the prereform system.

Political Corruption and Scandals

The pairing of scandals and corruption may sound perfectly natural, but scholars studying political corruption have seldom utilized the data generated from scandals in their analysis, and for very good reasons. Scandals provide only periodic and unsystematic glimpses into the secret world of corruption and the resulting information is therefore not suitable for statistical analysis. Most corruption occurs without ever becoming public knowledge. Even if corruption becomes public knowledge, it may not generate much public reaction. Conversely, scandals do not necessarily involve corruption and may well center rather on efficiency, incompetence, or mere carelessness (Moodie 1999, 882).

It is important to recognize that scandals are not a simple matter of an information stimulus producing a response of outrage from the public.³ Scandal construction requires an informer, channels available to communicate the message, and an audience that finds the information to be scandalous (Moodie 1999, 879). The prevalence of scandals cannot be used as a measure of the prevalence of corruption. In fact, we find that scandals were serious but uncommon when Japanese corruption was at its worst and that scandals became much more common, though also much less serious, when the corruption problem was getting better. One must be very careful in interpreting scandals, but we find that paying attention to both how a scandal was generated and what it revealed makes it possible to generalize about change in levels and types of corruption.

Throughout this book we examine a variety of political scandals to shed light on the nature and types of corruption that affect the functioning of Japan’s democratic process. We focus upon scandals that became issues in national elections, but our research also inspired us to consider other examples as well. In our analysis of scandals, we ask how they were constructed and what their consequences were for democratic politics. Our main finding is that the political reforms of 1994 have reduced levels of corruption.

Since the reforms, we find nothing close to the magnitude of the Lockheed, Recruit, and Sagawa scandals that preceded them—despite enhanced transparency leading to more scandals. Both scholars and the Japanese public are now able to see more of what is taking place under the cover of secrecy that hides corrupt activity. We provide sufficient detail so readers may judge for themselves, but we argue that the corruption revealed by the postreform scandals has not been as serious as the corruption revealed by prereform scandals.

The most important change after the reforms is the clear evidence of learning. When parties and/or politicians lose votes due to a scandal, other parties and/or politicians take note and adapt to avoid the kind of behavior that produced that scandal. The simplest example of learning can be found in accounting practices. After reform, it was common for politicians to be targeted by carefully examining their official campaign finance reports. It was easy to find inconsistencies. Many members of the Diet were found to be paying significant sums to rent offices that were rent-free. One could often find an interest group reporting a political donation that was not reported as income by the politician who received it, or vice versa. In each case, the evidence came from official reports filed by the politician so the politician could not deny the facts themselves, though they often came up with incredible explanations that no one believed. Accounting practices have since become more accurate and reliable. The reports are still useful sources of information from which a scandal could be constructed, but the probability of finding serious dirt has dropped drastically.

Studies in other countries also show that enhancing transparency makes it easier to construct scandals. Great Britain provides the most useful comparison on this point. The British Political Parties, Elections, and Referendums Act 2000 worked well, although the new rules on transparency generated a lot of media attention on the topic of party finance and contributed to public unease (Fisher 2009, 298). Japan proves no exception. Scandals tend to become more frequent after reforms that enhance transparency. And scandals then reduce corruption over time through a learning process. In Japan before reform, if a scandal revealed a serious corruption problem, one could expect to see a lull after the scandal followed sooner or later by another, similar scandal. After reform, if a spate of scandals revealed serious corruption problems, one could expect the flurry of attention to be followed by changes in behavior designed to avoid any similar scandal in the future.

Finally, since the reforms we find two new types of scandal that do not involve political corruption at all. First, what we call embarrassment scandals have become common since 1994. Sex scandals are the most common type of embarrassment scandals, but the category also includes such things as inappropriate statements or expenditures. Embarrassment scandals report unethical or immoral behavior by politicians and affect electoral outcomes, but such behavior does no obvious harm to the political process. Scandals can be constructed from any behavior that shocks the public, but the public tends to judge politicians much more harshly than do the politicians and political insiders (Allen and Birch 2012). It is this perception gap between the public and political insiders that makes embarrassment scandals possible. Behavior that is neither illegal nor corrupt but merely embarrassing may be used to construct a scandal that affects electoral outcomes and damages political careers.

In the construction of scandals, however, the discovery of unethical or immoral behavior may also exist in tandem with other behavior that may pose harm to the political process. When mainstream newspapers in Japan mention details of a sex scandal, the headline is almost always about some other more serious event that is showcased as the main subject of the story. The same pattern is found in the Western hemisphere: illicit sexual activity is involved, but many sexual-political scandals involve other details that can overshadow the significance of the sexual transgression (Thompson 2000, 120). For example, if a politician caught having an affair apologizes or resigns from a leadership role in his party, the newspaper headline is either about the issuing of the public apology or the resignation. In Japan most scandals involving sexual transgressions are confined to the tabloid newsmagazines, and it is the discovery of other sorts of behavior, such as the misuse of funds, that typically generates the major political corruption scandals.

We also find many scandals constructed from embarrassing details that do not involve political corruption as we define it. Like sex, money is often a ripe source to construct embarrassment scandals. When laws were enacted requiring politicians to keep receipts and better document their political expenses, journalists used this material to construct a series of scandals that shocked the Japanese public. The expenses were perfectly legal and did not pervert the course of democratic politics.

In 2009, for example, the mainstream press reported that the official disclosure reports of several senior DPJ members had counted receipts for nightclubs as part of their official political expenditures (Mainichi, 30 September 2009). One politician reported more than 2 million yen (around $21,000 at the 2009 exchange rate) in expenses spent at a total of eleven different hostess clubs in a five-year period.⁴ One of the venues used by the politicians included a new half or transsexual bar (Asahi, 16 October 2009). While the public reaction was one of shock and surprise, the politicians involved were quick to explain that there was nothing inappropriate about any of the venues used for unofficial meetings. In most cases, the politician had never stepped foot inside the nightclub. A secretary had taken a group of visitors from the politician’s district out for a night on the town and simply took them where they wanted to go (Mainichi, 30 September 2009). While no laws were broken, the controversy pitted the views of politicians and the DPJ against public perceptions, which assumed that such spending was extravagant and unnecessary. The only thing shocking was the titillating nature of the venue, not the practice itself.

Second, we also see an increase in policy failure scandals. Policy failures certainly happened before the reforms, but they did not become scandals. Before 1994 the scandals that affected elections results were political corruption scandals like Lockheed, Recruit, and Sagawa. The last two scandals were instrumental in the LDP’s first defeat and long-term stint in opposition since it was founded in 1955. After reform, however, the scandals that played significant roles in defeating governments were policy failure scandals. In 2007 the Japanese public was shocked to learn that the Social Insurance Agency (SIA) had lost some fifty million pension records. This lost pensions scandal played a significant role in the fall of the LDP-led coalition government in 2009, handing the reins of government to the DPJ for three years. The 2011 Fukushima nuclear accident was the direct consequence of decades of inefficient management and failure to address obvious problems, but it happened while the DPJ was in power and played a significant role in that government’s defeat in 2012.

Both policy failures had significant political consequences, but both were caused by bureaucratic, not political, corruption. The political parties and the government of the day certainly deserve criticism for failing to exercise effective oversight over bureaucratic incompetence and corruption, but the corruption that produced policy failure scandals was firmly located in the bureaucratic agencies. We see the rise of embarrassment and policy failure scandals as another, albeit indirect, piece of evidence indicating that levels of political corruption in Japan have declined since the 1994 reforms.

Our Fundamental Narrative and Approach

In the second half of the twentieth century Japan had a serious problem with political corruption. That corruption periodically erupted into scandals that cost the government votes. In the 1960s the LDP established single-party dominance, a party system associated with political corruption and, as should be expected, corruption grew more serious. The leadership of Tanaka Kakuei accelerated that trend in the 1970s. In the late 1980s and 1990s a rapid series of scandals stimulated reform movements and, in 1993, the long-dominant LDP lost power to a short-lived coalition government that managed to pass a significant political reform package in 1994. As argued above, those reforms led to a reduction in political corruption.

The reforms changed Japanese politics in several fundamental ways, many of which reduced political corruption. Most notably, the reforms enhanced transparency, which in turn empowered and energized both the opposition and the media. Transparency was enhanced primarily through the system of public financing. When candidates and parties receive political funds, they must fill out reports justifying their expenditures. The mass media and opposition parties then use the information to construct scandals that affect electoral outcomes. When a candidate’s political career is ended by a scandal, other candidates learn not to repeat that mistake, reducing the level of corruption. Both the media and opposition parties responded enthusiastically to the opportunity to construct scandals that sell newspapers and reduce public support for the government, thus becoming more proactive and better fulfilling the watchdog roles assigned to them by democratic theory.

The new electoral system based on single-member districts (SMDs) virtually eliminated intraparty competition, which is associated both with election law violations and many other kinds of political corruption. The electoral system also produced movement toward a two-party system and resulted in two alternations in power, in 2009 and 2012. Even this nascent and short-lived two-party system shifted electoral campaigns toward competition between parties over policy issues and away from competition between candidates promising benefits to their constituency, which in turn reduced the incentives to commit election law violations or engage in other corrupt activities. In the following chapters, we will fill in the details of this narrative, including the false starts along the way. This is our central narrative, but our interests are much wider.

Most studies of corruption ask comparative questions such as How corrupt is Japan compared to other nations? That is not our primary concern, but we should note that Japan is often considered to be a relatively clean country when compared to the other nations of the world. A commonly used source to study perceived levels of corruption is Transparency International’s Corruption Perceptions Index (CPI). It ranks countries by levels of corruption in the public sector based on the perceptions of business people and country experts. In 2016, for instance, Japan was given a score of 72 out of 100 (the closer the score to 100, the cleaner the country), which placed it in the twentieth spot out of the 176 surveyed countries and territories (Transparency International 2015).⁵ In a different study focused on citizen rather than expert perceptions, citizens were asked whether they have paid a bribe to a public body during the previous year (Transparency International 2015). Only 1 percent of Japanese respondents reported doing so, which along with Australia, Denmark, and Finland represents the smallest percentage of respondents among the 95 countries polled.

How can we square these findings with the narrative we presented above? First and foremost, Japan is a democratic country in which the rule of law has been firmly established and which has a low overall crime rate (Haley 2015). These simple facts help generate positive impressions of Japan as a relatively corruption-free country in the eyes of expert respondents.⁶ Second, the CPI is not focused on political corruption and thus includes much that is beyond the scope of this study and misses much of the corruption we described above. Third, very little of Japanese corruption involves ordinary citizens paying bribes. In Japan it is economic enterprises and interest groups who normally pay bribes, and much political corruption involves the embezzlement of public funds by politicians and bureaucrats instead of bribery.

The location and style of corruption varies across nations. Any single measure of corruption is bound to miss some forms while capturing others. Corruption in democracies does not necessarily look like corruption in nondemocracies. Even within the category of democratic countries, corruption in Japan does not look quite like corruption in Italy. We also find that the modes of corruption change over time in Japan. The raw purchase of specific public policies with bribes to specific individuals characterized political corruption in the 1950s. In the 1960s corruption shifted toward abuses of power. By the 1980s corruption has shifted yet again, featuring the purchase of diffuse access by spreading money broadly throughout the governmental elite, with little or none of the money being directly connected to a specific public policy. When studying corruption one should analyze not only the seriousness of the corruption problem but also its location—political, bureaucratic, economic, or other—and mode: who is paying money to whom for what.

We want to know what raises the level of political corruption and what lowers it, or, more simply, what works to reduce levels of corruption. We find significant variation in the levels of corruption over time, so the question How corrupt is Japan? cannot be