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Ex-Labor Official Arrested In Widening Stock Scandal

March 8, 1989

TOKYO (AP) _ Authorities today arrested a former government vice minister on charges he took bribes from a Japanese conglomerate, the latest bombshell in a widening stock scandal that has tainted the highest echelons of power.

The Tokyo District Public Prosecutors’ Office arrested Takashi Kato, 58, the former vice minister of labor and the highest-ranking public official yet arrested in the scandal.

Kato was charged with accepting bribes from Recruit Co. in 1986, when he bought bargain-priced stocks in Recruit-Cosmos Co., a subsidiary. He allegedly earned about $56,000 in profits when he later sold the stock after the company went public and share prices skyrocketed.

Prosecutors allege that Kato, in return for the stock deal, influenced a ministry decision on publishing employment information that would benefit Recruit, an information conglomerate.

Prosecutors today also arrested Masao Tatsumi, 46, a Recruit executive, who they claimed conspired with Recruit’s founder and former chairman, Hiromasa Ezoe, in bribing Kato.

The arrests brought to 12 the number of scandal-related arrests. Ezoe was apprehended Feb. 13 on bribery charges.

Two minor Recruit Co. officials were released Tuesday and prosecutors have yet to decide whether charges will be formally filed against them.

Kato’s arrest had been widely anticipated since prosecutors last month arrested Shigeru Kano, a junior officer to Kato, on bribery charges. Prosecutors today also searched Kato’s residence in Yokohama along with several Recruit branch offices in Tokyo.

The stock scandal, in which more than 150 politicians, public officials and business leaders were offered bargain shares in Recruit-Cosmos and earned handsome profits, has rocked the administration of Prime Minister Noboru Takeshita since last summer.

Many politicians, including Takeshita and former Prime Minister Yasuhiro Nakasone, have been linked to the widening scandal after it was revealed their aides had purchased thousands of the low-priced shares.

Three Cabinet ministers, including Finance Minister Kiichi Miyazawa, have already stepped down after their involvement in the scandal was revealed.

Meanwhile, opposition parties stalled deliberations in the Diet, the Japanese parliament, on the nation’s budget and demanded the Takeshita administration resign en masse or summon Nakasone to the Diet for questioning on his involvement.

″Without Nakasone appearing in the Diet, we cannot participate in the session,″ said Shun Ohide, an official of the Japan Socialist Party, the nation’s largest opposition group.

″You must resign now, Mr. Takeshita,″ said Socialist Party Chairman Takako Doi at a speech in northern Japan on Tuesday night. ″If you can’t resign en masse, you must dissolve the Diet and appeal to the confidence of the people by calling for an election.″

Takeshita repeatedly has called for political reform in efforts to leave the scandal behind, but almost daily developments have caused the administration’s popularity to plunge in media polls.

The newspaper Yomiuri Shimbun reported Thursday that of 2,211 adults polled, just 21.3 percent said they supported the Takeshita administration, down 6.1 percentage points from a similar poll in January.

The January poll’s findings marked first time below 30 percent for Takeshita since he became prime minister in November 1987.

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