Kazuyoshi Kaneko, state minister for the Industrial Revitalization Corp. of Japan, brushed aside criticism Tuesday that the state-backed corporate rehabilitation body isn’t living up to its name.

Despite its impressive name and up to 10 trillion yen in public funds at its fingertips, the funds remain largely untouched, disillusioned IRCJ employees are quitting and the body is not fulfilling its mandate, critics say.

Set up last year with a massive budget and the goal to turn around businesses deemed necessary to the Japanese economy, the IRCJ has begun to rehabilitate only 17 firms.

These numbers are irrelevant, Kaneko said.

“The private sector has been working harder since the IRCJ came on the scene,” he said, adding, “There are companies that say they will do anything if it means avoiding coming under the wing of the IRCJ.”

Kaneko said that businesses prefer to get help from the growing number of private-sector funds, eager to turn around troubled companies and make hefty profits.

Now bankers are banging on the IRCJ’s door.

Big companies like scandal-tainted automaker Mitsubishi Motors Corp. and large borrowers at troubled UFJ Holdings Inc., the nation’s fourth-largest banking group, have been named by politicians and the media as potential candidates for IRCJ restructuring.

If so, the new clients could invigorate the increasingly demoralized IRCJ staff, many of whom have already jumped ship, according to government sources.

Key IRCJ figures were lured away from lucrative positions at banks, law firms, insurance companies and private equity funds with promises that they would be able to make changes that would save Japan, said one IRCJ deserter, who spoke on condition of anonymity.

“After I joined, I found out the action was taking place somewhere else,” he said. “We don’t live on ideals alone. We need to know that we have accomplished something that will help us gain an edge at finding jobs when the IRCJ is gone.”

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