TOKYO, March 28, 2022—A serious insidious bureaucratization disease is spreading so fast across Japan that it might be impossible to halt until its implosion. Businesses that had resisted bureaucracy pressure are capitulating and accepting what are demanded by ministries and agencies and politicians.
Save a few exceptions, ex-bureaucrats for businesses work as ‘advisors’, ‘consultants’, ‘mediators’ between business and government as most have no hands-on experience. They would be asked to play the roles of ‘human shields’ to repel government investigators and tax authorities. They rarely speak out at board meetings.
An example of bureaucracy’s growing influence: A second-tier Japanese telecom, Internet Initiative Japan Inc., announced March 25, 2022 that it was promoting a former bureaucrat as an executive vice president. There’s nothing unethical or illegal about IIJ’s appointment of Yasuhiko Taniwaki, 61, even though he was forced to quit in March 2021 as a senior bureaucrat responsible for telecom administration for receiving during his incumbency grafts from the former national carrier NTT and a separate company where former prime minister Yoshihide Suga’s son works. Taniwaki was picked by IIJ in January 2022 as an advisor and his appointment is expected to be approved at a shareholder meeting in June, a company spokesperson Kuniko Arai confirmed to The Prospect March 28.
Taniwaki is the second bureaucrat to be installed on the IIJ board. IIJ CEO Eijiro Katsu, 71, a former vice finance minister and known for his high-handed attitude and who also had been implicated in a scandal, has been serving in his post since 2013 while the founder Koichi Suzuki stepped aside as chairman.
Katsu was asked to join IIJ probably by the NTT group, a former state telecom that had acquired the largest shares of IIJ when it was in distress. NTT continues to be under powerful influence of the government that holds 35 percent of common shares.
Japanese companies’ recruitment of former bureaucrats has been an integral practice of Corporate Japan dating back for centuries to the period after the country’s first civil war before the born of the Tokugawa shogunate in the 17th century. During Japan’s boom years of the 1980s, businesses challenged the practice of compulsory acceptance of retiring bureaucrats (known as ‘Amakudari (decent from heaven)) and the law was enacted to maintain ‘a cooling period’ between bureaucrats’ retirement and employment in the private sector.
It was hardly a surprise that bureaucracy outsmarted and circumvented the law by sending retired bureaucrats to ‘park’ at government-funded think-tanks for 6 months. In recent years, bureaucracy has been casting thicker shadows over the private sector that has been behaving like a rudder-less ship and in need of someone capable of planning – which is bureaucrats’ forte. Businesses are now hiring more bureaucrats than before, though simple comparison is impossible to do.
Example 2: Toyota Motor Corp. traditionally has been keeping a seat for a retired bureaucrat from the Ministry of Economy Trade and Industry on its board. Ikuro Sugawara, a former METI official, is retained for the seat as the sole ex-bureaucrat. But it allocates more seats for ex-bureaucrats, Haruhiko Kato, a former head of the Ministry of Finance Tax Bureau and the National Tax Agency who is said to be close to IIJ’s Katsu, as an auditor. Hiroshi Ozu, a former prosecutor-general, is another Toyota auditor.
Nobuyoshi Kodaira, a former Toyota board member, currently serves as chairman of the Toyota Foundation, a nonprofit. The Institute for International Economics, a separate Toyota entity, is headed by a former Foreign Ministry official, Keiichi Katakami. It has two deputies, one a former METI official and the other, a newly created seat, from the Ministry of Finance.
Bureaucrats were accustomed to be welcomed by businesses like senior samurai serving their domain lords during the Edo period, chauffeur-driven cars, gorgeous dinners and after-meal night clubs by businesses. Because of more inquisitive public eyes, contemporary government officials have become less visible and so too are businesses. But the old practice is not dead as seen in Taniwaki’s scandal, which was only a few years ago.
###
Insight Into the Future