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It used to be said that Japanese bureaucrats were first rate while politicians were third rate. That’s no longer true, as evidenced by an appalling spate of scandals involving slush funds in the central and local governments.

Some time ago the news media exposed the existence of slush funds at the Foreign Ministry, health ministry, and prefectural police departments across the nation.

Recently officials of the Gifu prefectural government have taken the brunt of criticism over off-the-book funds they created. A special audit committee of outside experts revealed early this month that secret funds set up for 12 years beginning in fiscal 1992 totaled a staggering 1.7 billion yen.

The funds, generated by claiming compensation for fake business trips and other activities, were used for office parties, expense accounts for senior officials and aid to officials punished for their role in separate scandals.

Senior bureaucrats and labor union officials colluded to hide part of the funds in union deposit accounts, which were immune from prefectural audit. The traditional practice of union leaders’ assuming the post of treasurer and other high posts in the prefectural government encouraged the collusion.

Longtime rule by some prefectural governors has created a hotbed for corruption. Taku Kajiwara was a four-term (16-year) governor of Gifu Prefecture until his retirement last year. In the 1990s, the existence of slush funds came to light at the Fukuoka and Miyagi prefectural governments.

To prevent corruption involving local bureaucrats, prefectural governors should be banned by law from serving multiple terms. Furthermore, a system should be established to prevent collusion between prefectural governments and their labor unions.

Why is the use of slush funds so widespread? Is it part of Japanese culture?

Public Prosecutor General Keiichi Tadaki, questioned at a news conference last month, said that during the economic bubble (before 1990) companies maintained gigantic expense accounts; likewise the central and local governments generated generous slush funds. After the bubble collapsed, he said, companies tightened their spending, but governments failed to make similar cutbacks.

I have reservations about Tadaki’s views. The money that companies use to fund their expense accounts is earned by them, while corrupt bureaucrats generate slush funds with tax money. Bureaucrats who misuse tax money in this way set a bad example for the public.

Tadaki argues that widespread slush funds stem from the Japanese culture of wining and dining but that the social inroads made by women will lead to the phase-out of the practice. Yet, slush funds detected recently were not used just for wining and dining; at some police departments, they allegedly provided farewell cash gifts to officials transferred to distant posts.

Admittedly, women are making inroads into Japanese society, but the proportion of women in management remains extremely low. In the national bureaucracy, only 1.5 percent of managers were women as of 2004. In private companies and other organizations, only 1.8 percent of department managers and 3 percent of section heads were women as of 2003, according to Cabinet Office statistics.

In tradition-bound Japan, the male-dominated system at government and company offices is unlikely to change soon. For women to play a leading role in social reform, affirmative action programs should be introduced to increase the proportion of women in management.

Tadaki also said bureaucrats should have requested the appropriations necessary for their activities. But for the most part, the slush funds have been used for questionable purposes. The fact that whistle-blowers have exposed the existence of slush funds at public prosecutor’s offices as well as police departments probably accounts for Tadaki’s lax comments regarding off-the-book funds.

Scandals involving bureaucrats were once blamed on their reputed low pay compared with that of their counterparts in the private sector, but with companies restricting pay raises since the burst of the bubble, there is no longer an appreciable difference in salary between government employees and company workers, except in some boom industries.

Civil service workers need no longer worry about the kind of severe job cuts common at private companies. Often they live in low-cost housing and are offered cushy post-retirement jobs. Japan is no doubt a paradise for government-sector employees.

Freedom-of-information ordinances introduced by all prefectural governments by fiscal 1998 have played a major role in exposing slush-fund scams. In 2001, the freedom-of-information act applicable to central government offices took effect. In 2005, the Board of Audit Law was revised to tighten inspections of government offices, and last April a law to protect whistle-blowers came into force. A number of measures have been introduced to prevent wrongdoing by civil service workers.

Still, parts of documents provided under the freedom-of-information laws are often blotted out. The revised Board of Audit Law obligates designated government organizations to comply with requests for information but does not provide penalties for noncompliance.

If the practice of generating slush funds by civil service officials and workers is not eradicated, the public will start having second thoughts about faithfully paying taxes. I believe that a special law should be implemented to end the practice. The law would exonerate officials from punishment if they admit to the misuse of public funds during a specified period. It would require only that they repay the amount of money misused.

Officials making such admissions after the grace period should be subject to strict penalties. To make the system work, rewards should be offered to whistle-blowers who make revelations about secret funds.

At the same time, raising the ethical standards of civil service workers and increasing public scrutiny of government service are in order.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
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