The Tokyo District Court, ruling on a 15-year-old bribery scandal that led to the downfall of a prime minister and touched deep into the bureaucracy, gave a suspended sentence Tuesday to Hiromasa Ezoe, founder and former chairman of information conglomerate Recruit Co.
The court ruled that Ezoe bribed politicians, public officials and businessmen alike by selling them pre-flotation shares of real estate subsidiary Recruit Cosmos Co., as the shares were certain to rise in value when the firm went public.
However, the court also noted that Ezoe, 66, has been “socially punished” since the case came to light in 1988 and therefore did not send him to prison.
The court handed him a three-year sentence, suspended for five years; prosecutors had sought a four-year prison term.
During the more than 13 year trial, Ezoe consistently denied bribing two Diet members, three bureaucrats and three businessmen in the mid- to late-1980s.
Following the verdict, Ezoe indicated that he will consult with his lawyers on whether to appeal.
In handing down the ruling, presiding Judge Megumi Yamamuro said the Recruit scandal “aggravated people’s distrust in politics and government administration.”
According to the court, Ezoe sold 53,000 pre-flotation Recruit Cosmos shares to lawmakers, bureaucrats at the education and labor ministries, and executives of Nippon Telegraph and Telephone Corp.
The case was the worst political scandal since the 1976 Lockheed case, which led to the arrest of then Prime Minister Kakuei Tanaka. Aside from the indicted figures, it was revealed that dozens of Diet members, businessmen and leaders in other sectors had received pre-flotation shares of Recruit Cosmos and obtained hefty benefits.
The scandal led to the resignation of Prime Minister Noboru Takeshita in 1989, and contributed to the ruling Liberal Democratic Party’s loss of an Upper House majority in an election that year.
According to the ruling, Ezoe sold 10,000 Recruit Cosmos shares at about 3,000 yen per share — well below market value — to then Chief Cabinet Secretary Takao Fujinami, and offered 3 million yen in cash and checks plus 5,000 Recruit Cosmos shares to then New Komeito lawmaker Katsuya Ikeda. The value of the shares shot up to 5,270 yen when they debuted on the market.
Both Fujinami and Ikeda had helped Ezoe by working to protect a gentleman’s agreement on when companies can start recruiting would-be college graduates, the court said.
The agreement was important for Recruit, whose core business was publishing job information magazines, the court said. At the time, the government was considering abandoning the agreement.
Ezoe was also convicted of giving away Recruit Cosmos shares as bribes to three bureaucrats, including then Vice Education Minister Kunio Takaishi and Vice Labor Minister Takashi Kato, as well as then NTT President Hisashi Shinto and two other NTT executives.
The trial focused on whether the sale of pre-flotation shares should be considered bribery.
Ezoe has insisted that he did not mean to reward the recipients for what they had done for the Recruit group, saying that the Recruit Cosmos shares were not guaranteed to rise in value and that he was “merely acting as a go-between” for legitimate stock transactions.
However, the court determined that given the booming stock market and other favorable economic conditions at the time, it was clear that Ezoe and other Recruit officials knew the shares were worth far more than 3,000 yen.
“To let these people exclusively purchase Recruit Cosmos Co. shares, which were almost impossible for ordinary people to buy, and at such a low price, indicates that the transactions were meant as bribery,” Judge Yamamuro said.
However, the court discounted the bribery as it was carried out with shares rather than cash, saying it was uncertain how much the shares’ value would rise.
In giving the suspended sentence, the court also noted that Ezoe had already been detained for four months following his arrest in February 1989 and that he had also experienced social punishments, such as his private life being exposed by the mass media.
The court also noted that since quitting the executive post at Recruit, Ezoe has engaged in philanthropic activities, including setting up a scholarship program with his own money.
During the trial, Ezoe had also insisted that he had been forced to confess during interrogation by prosecutors, who he said used tactics bordering on torture. He argued, for example, that he was told he “would not be released on bail unless he confessed.”
However, the court ruled that the credibility and voluntary nature of his confession to prosecutors were not in doubt.
“I apologize for causing serious trouble for a number of people and triggering social outrage because of my thoughtlessness, and I will continue to bear the blame (for the act),” Ezoe said in a statement released after the ruling. “The 14 years (since being arrested) have been long and hard. I hope to compensate (for what I have done) by doing what little I can do to contribute to society.”
The trial opened in December 1989. In all there have been 322 sessions, the largest number ever in a single trial.
While the prosecutors criticized Ezoe for protracting the trial by refusing to cooperate, Judge Yamamuro noted that the complicated nature of the charges against Ezoe were also responsible for the lengthy trial.
Of the 12 people indicted in the trial, all except Ezoe had already been found guilty and given suspended sentences. All the other rulings have been finalized.
Information from Kyodo added
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