The effective dismissal of the administrative vice minister of the Internal Affairs and Communications Ministry for leaking confidential information to a senior executive of Japan Post Holdings Co. sheds light on the questionable ties between bureaucrats and the former postal service monopoly that linger more than a decade after its privatization in 2007. The government needs to probe whether the leak is part of a broader and deeper collusion between the supervisor and the supervised, which undermines fairness in administrative service.
Shigeki Suzuki quit as the ministry’s top bureaucrat last Friday after he was given a three-month suspension from duty for leaking information on the government’s pending penalties on the Japan Post group over inappropriate sales of insurance policies to its customers — which was being discussed by a handful of senior officials including Suzuki and internal affairs minister Sanae Takaichi. He handed the information to Yasuo Suzuki, a senior vice president of Japan Post Holdings, who himself served as the ministry’s administrative vice minister before landing the job at the Japan Post group.
The leak reportedly came to light in an internal audit after the ministry learned that the Japan Post group knew of the penalties under discussion and was trying to approach relevant officials.
Takaichi apologized that the vice minister’s act “hurt the trust in and the neutrality of official duties.” She said it is “not desirable” for the ministry’s former bureaucrats to land executive positions at the Japan Post group because it makes it difficult for the ministry to make fair judgements in its supervision of the group’s business. If so, the government needs to explain why it has condoned such practices for years between the Japan Post group and the ministry.
In this prevalent practice of amakudari, retired government officials are given lucrative jobs in private sector companies, which in turn hope to have quick access to information on government policies concerning their sectors via the former bureaucrat’s connections. The conduct of the dismissed internal affairs vice minister highlights the murky nature of this practice. That the very official at the top position of the bureaucracy — who is supposed to oversee the entire organization — engaged in such an act highlights the grave nature of the problem.
The government remains a major shareholder in the Japan Post group even after its privatization in 2007. Japan Post Holdings, which has Japan Post, Japan Post Bank and Japan Post Insurance under its wing, is 57 percent owned by the government, and the internal affairs ministry holds the authority to approve the selection and dismissal of its board members. The ministry is also said to effectively pick the top executives that run the group companies.
In the brewing scandal over inappropriate sales of Japan Post Insurance policies, the group’s companies are accused of prioritizing sales targets over the interests of customers. To meet the demanding targets imposed by management, thousands of sales staff at Japan Post, commissioned with selling the insurance products, are suspected of leading their customers to sign contracts that harmed their interests — such as double payment of insurance contracts — through illicit practices such as giving false information to customers and getting elderly customers to sign the contracts in the absence of family members.
Along with the pending punishment by the Internal Affairs and Communications Ministry, the Financial Services Agency is expected to suspend a portion of sales at Japan Post and Japan Post Insurance as early as this week.
The key to rebuilding customer trust in the Japan Post group will be reforming its governance system in ways that put its customers’ interest first. Such efforts need to entail severing the murky connections with the bureaucracy that oversees the group’s business — which should have been done when the group was privatized more than a decade ago. Takaichi needs to go beyond calling the amakudari practice involving the Japan Post group undesirable and take steps that actually ensure the practice will end.
The government should not stop at merely punishing the individual bureaucrat who leaked the administrative information to the Japan Post group. It needs to get the bottom of the murky ties that have been exposed by the wrongdoing. In order to ensure fairness in administrative service, relations between the bureaucracy that supervises an industry or companies and the supervised businesses must be as transparent as possible.