The guilty verdict handed down by the Tokyo District Court to Hiromasa Ezoe, the central figure in the Recruit scandal, is a reminder that money holds potent power in politics. The scandal, which came to light in 1988, exposed a series of lucrative but shady stock deals involving influential politicians, bureaucrats and business executives. The ruling, which came 13 years after the trial began, points up another long-standing problem: the inordinately long period of time required to conclude a criminal case.
On Tuesday, Ezoe, the former founder and chairman of Recruit Co., an information conglomerate, was given a suspended sentence of three years in prison. According to the ruling, he requested favors in connection with the recruiting of prospective college graduates from several heavyweights in political, bureaucratic and business circles, including former Chief Cabinet Secretary Takeo Fujinami. In return for their efforts, he sold them large numbers of unlisted shares in a Recruit subsidiary. With the affiliate scheduled to go public, those shares were considered certain to fetch higher prices after the listing.
“By gaining the favor of politicians and bureaucrats as well as public companies,” the ruling said, “(Ezoe) tried to bring benefits to Recruit and its affiliates in terms of political, administrative and other operations.” All this was summed up, appropriately, as a “large-scale bribery scandal,” suggesting that it occurred in an extensive climate of distributive politics.
The year after the scandal broke, in 1989, investigations by Tokyo prosecutors led to the fall of Prime Minister Noboru Takeshita’s administration, setting a process of political reform in motion. But the problem of money politics remained unresolved. The antigraft law has been updated, but the Diet has yet to pass tougher legislation to establish politics ethics.
The trial has brought to the fore yet another recurring problem in bribery cases: a suspect’s denial in court of what he or she said during an investigation. Ezoe admitted his guilt during the investigation but reversed his position during the trial. The question at stake — which version of his story should be accepted as the truth — weighed heavily on the proceedings. One solution to the problem raised by this question would be to introduce the use of video cameras into investigations.
In terms of factual information, however, most of what Ezoe told investigators has proven true. For example, he has admitted, as he did in the investigation, that he requested favors from Mr. Fujinami and former Lower House legislator Katsuya Ikeda. He has contradicted himself only on the exact number of times these requests were made. He has also admitted to giving a bribe to former NTT Chairman Hisashi Shinto, changing his original statement only in relation to the motive behind the bribe.
Given these meager results, the whole trial — consisting of 322 court sessions since December 1989 — has been anticlimatic. One reason for the delay is that the defense counsel has consistently denied Ezoe’s guilt. Another reason is that the prosecution became more cautious about pressing its case as the trial proceeded because defendants in other Recruit trials, including Mr. Fujinami, had received not-guilty verdicts, which were later reversed, in district courts.
One problem is that neither the defense council nor the prosecution was in a position to know the other’s intentions until the trial began. This problem, which stems from existing litigation procedures, needs to be resolved. One solution now under consideration is to have both sides disclose evidence in their possession and sort out the issues prior to the start of trial.
Still another reason the Ezoe case has become protracted is that other related cases — those involving politicians, NTT executives, and labor and education ministry officials — have been handled separately, making Ezoe the last defendant to face judgment. This must have placed an undue burden, psychological and otherwise, on Ezoe himself.
Finally, there is a sensitive question that the ruling has failed to answer convincingly: When does selling unlisted shares become an outright bribe like a cash payout? The decision plays down the nature of Ezoe’s misconduct, saying that what he did was not as serious as giving money because there were “uncertainties” about share prices. The message seems to be that the stock deals did not represent a straight bribe because there was no assurance that the takers would gain from higher prices.
This ruling could encourage, not discourage, veiled bribery in the form of noncash payments, such as selling potentially lucrative shares before their public offering. Business people should not take this as an excuse for trying to buy political influence in ways short of outright bribes. It is essential to establish strict standards for business ethics.
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