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The Recruit Co. That Felled Politicians is a Business Success With PM-Japan-Politics, Bjt

June 2, 1989

TOKYO (AP) _ The Recruit Co. is the parent of a group of publishing, finance, and real estate companies whose former chairman is accused of bribing legislators and government officials to get favors for his firms.

Five Recruit executives, including its founder and former chairman Hiromasa Ezoe, have been arrested on charges of bribery and securities law violations.

Ezoe, 52, started an employment information magazine in 1962, eventually branched out into real estate and finance, and built a large conglomerate considered one of Japan’s most innovative in the fast-growing services sector.

In Japan, where companies compete fiercely to attract top-grade employees and where job mobility is increasing, specialized employment information is big business. Shiny highrises with large Recruit logos dot Tokyo’s expensive business districts, and a variety of Recruit magazines can be found on almost any newsstand.

In order to influence legislation and get other favors, prosecutors say, Ezoe sold millions of dollars worth of stock in the Recruit-Cosmos real estate company at bargain prices to 13 legislators from Japan’s ruling Liberal Democratic Party, four opposition lawmakers, and about 140 influential businessmen and government officials. Purchasers of the stock reaped large profits when share prices shot up when first publicly listed in 1986.

Former Prime Minister Yasuhiro Nakasone admitted receiving 45 million yen ($320,000) from Recruit; Prime Minister Noboru Takeshita, replaced today by Sousuke Uno, admitted receiving 151 million yen ($1.4 million) in stocks and donations from Recruit through an aide.

After the scandal broke last summer, Hiroshi Matsubara, a top aide to Ezoe, was arrested and received a suspended sentence of 18 months after a video camera captured him attempting to bribe an opposition lawmaker to soften investigation of the scandal.

Despite the scandal, the company has continued to do well. Sales at the Recruit Co. jumped 46 percent to 269 billion yen ($2.1 billion) last year, according to figures released by the company.

Profits jumped nearly 24 percent to 37.77 billion yen ($290 million) last year, ranking it near the top 100 Japanese companies, according to Tokyo Shoko Research Co., a private credit research firm.

Recruit Co. is privately held and does not reveal profit figures.

Profits at First Finance Co., another Recruit group company, jumped nearly 10 times to 17.06 billion yen ($131 million), the report said.

However, the scandal may hurt future prospects for the company, said Toshihiko Yamazaki of Tokyo Shoko Research.

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