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Could jealousy link the Financial Ministry scandals together?

by Philip Brasor

Contributing Writer

Although not directly related, the allegation that former Administrative Vice Minister Junichi Fukuda was a sexual harasser was initially reported as a sideshow to the ongoing Moritomo Gakuen influence scandal that is dogging both Prime Minister Shinzo Abe and the Finance Ministry. Fukuda was the top bureaucrat in the ministry and, thus, more intimately connected to its operations than Finance Minister Taro Aso, who responded to the story, broken by weekly magazine Shukan Shincho and denied by Fukuda, by saying he had scolded the vice minister but, pending concrete evidence of any harassment, wouldn’t fire him. Then Fukuda quit.

However, the damage was already done. The Finance Ministry has already admitted to falsifying documents that could indicate favoritism toward Moritomo for its proposed Osaka primary school in deference to Abe’s wife, Akie, because she was going to be the honorary head of the school. Fukuda was not in charge of the ministry at the time of the falsification, and the press wasn’t saying that Aso was trying to protect him or the ministry for anything related to Moritomo. What they were saying is that both scandals represent a sea change in the relationship between the Finance Ministry and the Cabinet.

As explained by former TV Asahi reporter Koji Kawamura during an April 13 discussion of the situation on the web channel Democracy Times, the bureaucratic head of the Finance Ministry was once the most powerful person in Japan. When Kawamura was covering the ministry in the late 1970s and early ’80s, it was still called the Okurasho in Japanese, and prime ministers would defer to the administrative vice minister on economic-related decisions. According to Kawamura, when then-Prime Minister Yasuhiro Nakasone promised during a campaign speech that he would not introduce an “indirect tax,” he was immediately warned by then-Administrative Vice Minister Yoshihiko Yoshino not to say such a thing in public ever again, since the Finance Ministry’s goal was to implement an indirect tax. Journalist Kensuke Karube relates the same story in his new book about Abe’s economic policies as a prelude to the power shift that came about when the Okurasho split into the current Zaimusho (Finance Ministry) and Kinyucho (Financial Services Agency) in 2000-01 after losing control of monetary policy to the Bank of Japan in 1998.

Kawamura claims that, ever since then, the caliber of Finance Ministry employees has declined significantly. Advancement is everything in a bureaucracy, and competition within the Okurasho for promotions was fierce, producing officials who could wield their authority with confidence and expertise. Competition is no less fierce today, but since 2014 promotions are all about who can suck up to the administration more convincingly, since they are no longer decided internally but overseen by the new Cabinet Bureau of Personnel Affairs. The elected government has the upper hand.

These circumstances were outlined by former Osaka Gov. Toru Hashimoto on an Abema TV talk show on March 15 after a viewer asked about the “responsibility” of Abe and Aso for the Moritomo scandal. Hashimoto answered that if this type of incident had happened in “a commercial company,” the CEO  would have to resign but the relationship between the political administration and the civil service is different. Each has to fight the other for what it wants, but in the past the Finance Ministry was always more powerful, using its status to intimidate. The top university graduates have always gravitated to Kasumigaseki, the heart of the national bureaucracy, and the best of those to the Finance Ministry, where they cultivated a superior attitude toward the rest of the public sector.

As the Nakasone anecdote suggests, the Finance Ministry had always advocated for an indirect consumption tax. It finally got one in 1989, but it wasn’t enough. When the now-defunct Democratic Party of Japan was the ruling party, it agreed to eventually increase the tax to 10 percent, but in 2012 it lost the government to the resurgent Liberal Democratic Party and Abe, who has since postponed the planned hike to 10 percent for political reasons. In addition, Abe said the tax will pay for social security, thus angering the Finance Ministry, which has always wanted to apply it to debt reduction. If the Finance Ministry thinks the government is politically vulnerable, they push their agenda more forcefully, says Hashimoto, but they saw the Abe Cabinet as being strong and, since it now controls their fate, they do what they can to please the prime minister. That’s why they allegedly approved the drastically discounted Moritomo land sale and then falsified documents after the Asahi Shimbun broke the story, he says. If the daily hadn’t reported it, it would have been “a perfect crime,” in Hashimoto’s words. Abe’s mistake, he adds, is that he didn’t acknowledge the Finance Ministry’s deed. If he had ordered a proper investigation a year ago, the scandal would have gone away, but he didn’t want to admit to being the possible cause of it, even if he had no direct involvement in the decision to give Moritomo a discount.

According to financial journalist Hiroko Ogiwara during the April 13 Democracy Times discussion, the “sudden” decision to approve the discounted land sale coincided with Abe’s announcement that he was postponing the consumption tax hike for a second time. The Finance Ministry was determined to change his mind, but they were confounded by the trade ministry, which is against the hike and has more influence over Abe since many of his aides formerly worked for the trade ministry.

In that regard, the subtext that connects the Moritomo and Fukuda scandals could be class jealousy. Although Abe is the scion of a powerful political dynasty, he graduated from unexceptional Seikei University and seems to resent the University of Tokyo graduates who run the Finance Ministry. To the media, that’s what makes the Moritomo scandal so delicious: “Elite” bureaucrats trying to score brownie points with a relatively unsophisticated prime minister. Who can resist such a tale?