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Authorities Raid Labor Ministry Offices in Japanese Stock Scandal

February 17, 1989

TOKYO (AP) _ Authorities investigating a major stock scandal today raided the main offices of the Labor Ministry and nine of its other facilities, and they arrested a former ministry official.

Shigeru Kano, 55, former head of the Labor Ministry’s employment service division, became the eighth suspect and the first former government official to be arrested in connection with the scandal. Since the scandal broke, 20 people, including three government ministers, have resigned their positions.

Kano resigned from his post in January after reports surfaced linking him to the stock scandal, in which selected politicians, bureaucrats and others were offered bargain-priced unlisted shares in Recruit-Cosmos Co., a real estate subsidiary of the information-service conglomerate Recruit Co.

Shareholders earned large profits after the stock was offered for over-the- counter trading, raising the issue of bribery and favor-granting on the part of those involved.

The Tokyo District Prosecutors Office and Justice Ministry officials charged Kano played a major role in easing restrictions on employment information publishing, a move that would benefit Recruit Co., which earns 60 percent of its income from publishing employment-related information.

Recruit officials allegedly spent $10,000 wining and dining Kano in return for his assistance in easing the restrictions, prosecutors claim.

Following Kano’s arrest, 15 investigators from the prosecutors office raided the main building of the Ministry of Labor, as well as nine other ministry-related facilities, to search for evidence against the former official, who resigned in January.

Prime Minister Noboru Takeshita described the raid on a public office as ″a very serious matter.″ He addressing legislators in a parliamentary committee but refused further comment on the latest development, saying he didn’t yet have all the details.

Public support for Takeshita has been severely waning, a number of public opinion surveys have shown recently. A relative and an aide of Takeshita were invited to purchase the Recruit-Cosmos shares, but the prime minister himself has denied knowledge of the transactions.

Chief Cabinet Secretary Keizo Obuchi, another high-ranking involved in the scandal, said today that he regretted the arrest of a public official.

″From the standpoint of establishing strict descipline among public servants, it is regrettable that (the arrest) has in effect led to loss of public trust in the labor administration,″ Obuchi said in a news conference.

Also today, opposition parties stepped up demands in the Diet, or Japanese parliament, that former Prime Minister Yasuhiro Nakasone appear before a parliamentary committee for questioning on his own links to Recruit.

Nakasone was one of 17 politicians who earned hefty profits in the transaction of unlisted shares. On Thursday, legislators raised questions regarding Nakasone’s role as then-prime minister in the purchase of two U.S. supercomputers.

Nippon Telegraph and Telephone Co., a government telecommunications monopoly until its privatization in 1985, purchased two multi-million-dollar supercomputers from Minneapolis-based Cray Research Inc. and resold them to Recruit in 1986.

The supercomputers, operated by Recruit, have been kept on NTT premises until now and maintained by NTT technicians. Opposition lawmakers have charged Recruit is receiving favorable treatment and that Nakasone played a role in arranging the purchase and maintenance setup.

Naohiko Okubo, secretary general of the second-largest opposition party Komeito, called on Takeshita today to disclose the contents of the meeting between Nakasone and former President Reagan in May 1987 in Washington, during which an agreement over the supercomputer purchase was reportedly reached. Okubo was addressing a nationally televised parliamentary committee session.

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