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Sunday, Sept. 26, 2010

Recruit founder revisits a scandal that shook the nation

Special to The Japan Times

Remember the infamous Recruit scandal of the late 1980s that brought down a government, tarnished the reputations of Japan's movers and shakers and left the public convinced that the government was rotten to the core?

News photo
Speaking out: Hiromasa Ezoe, founder of the Tokyo-based human resources and employment company Recruit, was the self-made tycoon at the center of a 1980s corruption scandal that brought down a government and to this day, in light of subsequent scandals, has left Japanese people with little faith in their leaders. His new book "Where is the Justice?" reopens many old wounds as he strongly proclaims his own innocence of any criminal wrongdoing. JEFF KINGSTON PHOTO

By some counts it was all a misunderstanding, blown out of proportion by a rabid media.

Hiromasa Ezoe, the founder of Recruit who is now a spritely and sharp-witted 74-year-old, told The Japan Times in a recent interview that his actions were legal and the case against him was based on moral outrage rather than the law.

He may be right, or not, but his new book (reviewed on today's Books Review page) makes a compelling case that shifts blame to the media and to prosecutorial abuses eerily similar to the recent imbroglio involving Atsuko Muraki, the health ministry official who it now emerges was framed by prosecutors.

After a 13-year trial, Ezoe was found guilty, but the suspended sentence handed down to him, and his summary of the judge's ruling, lends credence to his contention that the prosecution failed to prove its case; the guilty verdict saved face for the prosecution while suspending the sentence was a nod towards justice. Recruit, a Tokyo-based human resources and employment company, distributed pre-flotation shares in a real-estate subsidiary, Recruit Cosmos, to lawmakers and prominent figures in the business world in the mid-1980s. When Cosmos subsequently went public, its share-price rocketed, enriching recipients of those shares — allegedly including then Prime Minister Noboru Takeshita, former Prime Minister Yasuhiro Nakasone and future prime ministers Kiichi Miyazawa and Yoshiro Mori among several other politicians from across the political spectrum.

In many cases, it was their political secretaries who were implicated, but being a potentially convenient scapegoat is part of such secretaries' job description.

The Yokohama bureau of the Asahi Shimbun newspaper broke the story in June 1988. At the time nobody, least of all Ezoe, imagined that the original story about a deputy mayor of Kawasaki, in Kanagawa Prefecture, receiving shares in exchange for favors would snowball into such a massive scandal reverberating throughout the corridors of power, toppling the Takeshita Cabinet and dominating the news through the end of the 1980s.

One of the lingering mysteries is who leaked the list of recipients of the pre-flotation shares handled by Daiwa Securities.

Questions about who and why still gnaw at Ezoe. He contends that the scandal might have been avoided if not for Tatsumi Tanaka, chief of public relations at Recruit, who came up with the idea of bribing Diet member Yanosuke Narazaki to buy his silence. Given that Tanaka touted himself as a specialist in risk management, his advice was taken.

The bribe offer was covertly videotaped and aired on television, providing unambiguous evidence that Recruit was involved in a cover-up and was guilty of trying to suborn a lawmaker.

This was the smoking gun that convinced everyone that Ezoe was also guilty, but he maintains that he was not involved with the bribe scheme and blames Tanaka.

He states, "Mr. Narazaki, a member of Shakai-Minshu-Rengo (Socialist Democratic Federation), a very minor party, had no influence at all in the Diet. Recruit did not approach him. Rather, he came to Recruit over and over again to request the list of individuals who had purchased shares of Recruit Cosmos, and finally Hiroshi Matsubara, chief of the presidential office, decided to offer some money. In addition, this incident happened when I had already resigned from Recruit and was in hospital, which was the only place I could find to hide from media attacks. So, I had nothing to do with this incident."

In effect, instead of bribing this nobody, Ezoe suggests it was a case of being shaken down and set up.

Ezoe indicts the media and prosecutors for wrongfully prosecuting him and subjecting him to a lengthy and excruciating ordeal. He is especially critical of how the media convicted him through innuendo and faulty assumptions, jumping to conclusions not merited by the evidence and failing to distinguish between legal wrongdoing and moral wrongdoing.

Ezoe explains, "I was an example of the proverbial nail sticking up ready to be hammered down. I think I appeared in various media too often — even on daytime tabloid TV shows. In addition, although I was brought up in a poor family, Recruit, the information company I founded, performed far better than other media companies, including major newspaper companies and TV stations in terms of sales and profits. I think that is why I became a target of their attacks.

"In Japanese society, it is a tradition that those who were brought up in a family of pedigree are more respected than those who are not. It would be possible to say that Japan's former Prime Minister Yukio Hatoyama is a good example."

Ezoe is unrepentant, but confesses, "As for my spreading pre-flotation shares in Recruit Cosmos to influential people, I think it was moral wrongdoing, and I regret it now. I supported politicians too much and was too eager to cultivate friends. I was wrong to do so. That is my moral wrongdoing. I crossed the line of what is acceptable, and my actions were judged not on the law, but on moral norms. . . . the commonsense of Japanese could not accept my actions, and at the time I failed to understand that. So in that sense I bear moral responsibility."

He argues, however, "I did not think that I was 'buying' the way to the core of power, but believed I was only supporting talented politicians' activities. In retrospect, as the power of the media is far stronger than that of politicians after all, I think that what I did had little value, and I regret it."

Despite Ezoe's claims of supporting "talented" politicians, the list of recipients, including many powerbrokers and fixers, belies assertions of pure motives.

Contentiously, he says, "Many people think that when I distributed the shares I expected something in return . . . that it was to buy influence and get favorable policy decisions. But that was not my intention. I had no expectation of a reward, but this was not understood by the public and the media sensationalized it."

Asked about the legacy of his actions, he comments, "Since the Recruit scandal, the public believes that it is a bad thing to offer financial support to politicians. I think this has had a negative influence in terms of promoting quality people in the political arena."

But can we really believe that the decline of money politics explains the miasma of incompetence in the Diet?

Ezoe decided to fight the prosecutors because he was angry at being forced to sign inaccurate statements under coercion. In doing so he defied social expectations. He points out that, "Since olden times in Japan there has been an expectation that the accused will apologize and show remorse for his actions and then he will be forgiven. But instead I chose to fight and thus I was never forgiven."

In his view, his court case dragged on so long because, "The prosecutors did not have solid evidence, Masao Tatsumi, the head secretary of Recruit was found innocent at the first trial as was the lawmaker Takao Fujinami (of the ruling Liberal Democratic Party), and the prosecutors became cautious."

Although he could have avoided judicial purgatory if he had plead guilty and apologized, Ezoe insists it was worth fighting the charges because he was innocent and had to defend himself at all costs.

Ezoe learned just how powerful the media is at igniting and directing judicial witch hunts. During his many interrogations over 113 days of detention, prosecutors forced him to sign statements implicating others that conformed to their scenarios — ones that drew heavily on muckraking media reports.

Moreover, he says, "I have some judge friends, and they say that they worry how the media will report on their court decision whenever they write a verdict. Judges are members of this country's bureaucracy after all, and structurally, if their decision is criticized by the media, their promotion will be affected." Asked why he is now coming out with his story in English, in his book titled "Where is the Justice?, he says, "I have never thought that the stigma on my name has been cleared."

In addition, he adds, "Through my 13 years in Japanese courts, I witnessed a number of problems the legal system has. I published this English version to tell the world about them. I hope that reactions and opinions from abroad will give positive influence to the judicial reform the Justice Ministry is considering now."

Ezoe has a largely negative opinion of Japan's legal system and the reliance on coerced "confessions." Curiously, in light of his travails, he does not oppose the death penalty. Rather than focus on wrongfully convicted people being put to death, Ezoe says it is imperative to abolish the investigative practices and coerced confessions that lead to wrongful convictions. To this end, he favors complete videotaping of interrogations, but holds out little hope that this will happen because the Justice Ministry opposes this reform and does not want to tie the hands of investigators.

Ezoe believes the obsession with maintaining Japan's current 99 percent conviction rate drives widespread prosecutorial abuses. Tampering with evidence in the recent Muraki case, and the false statement implicating her allegedly coerced from a colleague, lend credence to Ezoe's indictment of the justice system in his book.

Asked about the media playing a positive role in uncovering and overturning cases of wrongful convictions, he points out that media hysteria and pack journalism is often responsible for initially railroading innocent people, and thus merits no kudos.

He asserts that, "Usually (overturning wrongful convictions) is due to scientific evidence such as DNA tests that cannot be disputed. It is usually support groups who lobby and get the reversal of decisions. The media only joins later and in most cases it exposes wrongful convictions that it is principally responsible for in the first place due to its practice of trying cases in the media before the trial."

Ezoe blames the media for his legal troubles, but does not see any prospects for reform because social norms support the press, and the public is not aware of how the media systematically colludes on how to present the news, abuses its power and otherwise acts irresponsibly. He doesn't think Japan will adopt stricter libel laws, and says that when prominent people such as (bigwig politician) Ichiro Ozawa or (Livedoor founder) Takafumi Horie are accused they only make matters worse for themselves if they defend themselves, because the media acts as arbiters of public morals and have enormous power to shape perceptions. However, when reflecting on the loose threads of why the scandal came to light, it is hard not to wonder whether the dark side of Recruit Cosmos, a real estate firm that may have engaged in dubious practices involving dodgy people, was a factor. And, even though the sprinkling of stock shares may not have been illegal, and did not involve an explicit quid pro quo, in Japan one can hardly ignore implicit expectations and obligations.

The moral outrage targeting Ezoe was apparently triggered by jealous envy over his self-made wealth, his personification of excessive materialism during the era of Japan's bubble economy — and what appeared to be too clever exploitation of gray areas in the law. His actions offended social mores, as he manipulated the system and blatantly doled out favors, anticipating that powerful recipients would find themselves in a position to reciprocate in some way and would do so.

Ezoe insists this is untrue, but even as this interviewer finds himself convinced by his criticisms of the media and judiciary, doubts linger. In the end, Ezoe ruefully recognizes that he has not put to rest the broader doubts and recriminations about rigging the system and conduct unbecoming, lawful or not.

Indeed, the media has retaliated. In the October issue of Bungei Shunju magazine, journalist Ryo Sakagami — who covered the Recruit scandal for national broadcaster NHK — claims that a former Recruit employee showed him a list detailing Ezoe's cash payments to politicians. These fresh allegations raise new questions about Ezoe's actions and intentions — and doubts about his self-vindicating book. But given Ezoe's allegations concerning media abuses, there are good reasons not to rush to conclusions.

Certainly, the final curtain has not yet fallen on this scandal, and I doubt we have heard the last from Ezoe.

Jeff Kingston is Director of Asian Studies, Temple University Japan.

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