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Saturday, July 19, 2003
Japan Highway on the road to ruin; 617.477 billion yen in debt: document
A set of secret documents allegedly compiled by Japan Highway Public Corp. suggest that the semigovernmental corporation is in a state of capital deficit.
The documents, copies of which were recently obtained by The Japan Times, cast doubt over the nation's expressway construction plans.
The documents are thought to have been drawn up by a Japan Highway project team last year as a means of assessing the total assets and liabilities of the corporation on the basis of private-sector standards.
The debt-asset balance is a crucial gauge for assessing the financial health of a private-sector firm, with a Japan Highway insider having recently claimed that the balance sheet was compiled at the behest of a government panel discussing its privatization.
The documents show that the total liabilities of Japan Highway exceeded its assets by 617.477 billion yen.
Opposition lawmakers claim that Japan Highway tried to hide the balance sheet, fearing that the corporation's financial woes would preclude it from building more expressways following its privatization in fiscal 2005.
The documents have provoked acute political speculation as Japan Highway has been an essential tool through which many ruling party politicians have implemented pork-barrel road construction projects in their home districts.
If the documents prove authentic, they would also deal a severe political blow to Prime Minister Junichiro Koizumi, who has rejected opposition demands that he order land minister Chikage Ogi to dismiss Japan Highway President Haruho Fujii.
Opposition lawmakers charge that Fujii is trying to sabotage the privatization process.
The contents of the documents were first exposed by Sachio Katagiri, deputy head of the Shikoku branch of Japan Highway, in an article he contributed to the latest edition of Bungei Shunju, a monthly magazine.
But the documents, now the subject of Diet debate, not only show the balance sheet figures, but also details of the methods used by the project team to collect data and assess the value of its assets.
Initially, Fujii vehemently and repeatedly denied the existence of these documents. After being shown part of the documents, he said he had never seen them before and knew nothing about them.
Fujii told the Diet this week that a project team of this kind was once formed, comprising staff below the section-chief level. The team was soon disbanded, however, without submitting any conclusions or reports to upper-level officials due to lack of data with which to estimate the value of the corporation's various assets, he added.
Yet the documents suggest that Japan Highway mobilized staff from all levels on a nationwide basis, including a number of senior executives such as Fujii himself.
One page shows an organization chart for the project team and the working groups under it. It shows the project team reported directly to Fujii.
Seiji Maehara, a House of Representatives member of the Democratic Party of Japan, disclosed part of the documents and grilled Fujii during a July 15 Lower House session.
"(Japan Highway's) organizations across the country were mobilized to collect data. I must say I have doubts about (Fujii's) Diet testimony," Nobuteru Ishihara, minister in charge of administrative reforms, told a news conference Friday.
If Fujii tried to hide a balance sheet showing that Japan Highway's liabilities exceed its assets, it would constitute "a crime," Ishihara added.
Meanwhile, Ogi, who has the power to remove Fujii from his position, said she has ordered Japan Highway to undergo audit inspections by one of the nation's four major auditing companies.
Should the documents be authenticated, it would mean that Fujii had lied during a Diet session -- an act that would usually prompt a high-ranking bureaucrat to resign.
But Akira Nagatsuma, a Lower House member of the DPJ, said Koizumi will likely wait until the Diet session ends July 28 to sack Fujii, thereby preventing the dispute from disrupting the legislative schedule.
Japan Highway builds expressways by borrowing government loans and repaying the debts through road tolls.
The body's total debts have hit more than 40 trillion yen, prompting the government last year to set up an expert panel tasked with finding ways to streamline and privatize the corporation.