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Two More Arrested in Japanese Stock Scandal

March 8, 1989

TOKYO (AP) _ Prosecutors made two more arrests Wednesday in an insider-trading scandal that has raised questions about Japan’s big-money politics and stained the vaunted integrity of its civil service.

Opposition parties boycotted debate on the budget, bringing Parliament’s business to a halt, and renewed their demands that Prime Minister Noboru Takeshita call new elections and resign so the public can render its verdict.

Those arrested Wednesday were Takashi Kato, a former vice minister of labor, and Masao Tatsumi, a former senior executive of the business information conglomerate Recruit Co.

Tatsumi is accused of bribing Kato in 1986 to obtain favorable treatment of Recruit by the ministry.

Kato was among more than 150 senior bureaucrats, political figures and businessmen who were offered bargain shares in Recruit-Cosmos Co., a real estate subsidiary of Recruit, before the company was listed.

When the shares went on public sale, their value soared and Kato made a profit estimated at about $56,000.

Prosecutors have arrested 12 people so far, but released two junior Recruit officials Tuesday and have yet to decide whether formal charges will be filed against them.

They say Kato, the highest-ranking public official held in the scandal, influenced a Labor Ministry decision on publishing employment information that was to Recruit’s advantage. A lower-ranking ministry official, Shigeru Kano, was arrested on bribery charges last month.

″For Japan’s civil servants, this spelled a most embarrassing scandal that discredited them all in the eyes of the public,″ the influential national newspaper Asahi said in an editorial.

″We wonder if (bureaucrats) are still able to really ‘serve’ the public at large. If their consciences are being clouded by bribes and so much extravagance, they are betraying the public.″

The Japanese generally have regarded senior civil servants as officials of high integrity.

Kato’s arrest came two days after that of Hisashi Shinto, 78, former chairman of Nippon Telegraph and Telephone Corp., the world’s largest company in terms of stock value.

Shinto also is being held on bribery charges in connection with alleged favorable treatment of Recruit by the giant telecommunications utility.

Takeshita’s administration has been buffeted by the scandal since the first reports of it last June.

Three Cabinet ministers have resigned because of links to Recruit, the governing Liberal Democratic Party has lost interim elections and a storm surrounds political and corporate ethics.

In Parliament, the boycotting Japan Socialist Party, Komeito (Clean Government), Democratic Socialist Party and Japan Communist Party said they also would insist Takeshita’s predecessor as prime minister, Yasuhiro Nakasone, appear before a committee.

Three Nakasone aides bought 29,000 Recruit-Cosmos shares in 1986 but he denies involvement in the Recruit affair.

″Without Nakasone appearing ... we cannot participate in the session,″ said Shun Ohide of the Socialists, the main opposition group.

Takeshita has coupled his refusal to resign with repeated pledges of political reform, but polls indicate a steady decline in his public support.

Yomiuri, Japan’s largest newspaper, released a poll last week in which only 21.3 percent of respondents said they supported the his government, down 6.1 points from January. The January poll was the first since Takeshita took office in November 1987 to show him with an approval rating below 30 percent.

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