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Asia/South Asia
Japan's bureaucratic old boys uncertain of soft landing
David Pilling and Mariko Sanchanta

          IF you want to know where former high-flying Japanese civil servants are currently employed, one way is to count the air-conditioning units.
In the latest in a cement truck-load of bid-rigging scandals, three current and former defence agency officials were arrested recently over the allocation of lucrative contracts. One allegation was that orders to supply the military with air-conditioners went with unnerving frequency to companies that had provided jobs to former defence officials.
The scandal has put the spotlight back on a practice known as amakudari, literally "descent from heaven" -- parachuting bureaucrats into well paid sinecures.
Fukushiro Nukaga, defence agency director-general, has been here before. In 1998 he resigned to take responsibility for another procurement scandal. In that case, the judge said: "The motive for the crime was to protect officials' interests and secure amakudari to get cushy jobs after retirement from the agency."
At its most innocent, amakudari is a necessary placement scheme for long-serving elite bureaucrats that can help maintain dialogue between public and private sectors.
That was a vital function when, as Gerald Curtis, political science professor at Columbia University puts it, Japan was a "state-led market economy".
Even now it is needed because, under Japanese convention, all bureaucrats in a particular recruitment year must retire when one of their number reaches vice-minister level -- a quirk of the seniority system that leaves some of Japan's brightest 50-year-olds seeking employment.
But at its worst, amakudari is a form of institutionalised corruption that promotes collusion between the regulator and the regulated and between the procurement officer and the contractor.
Atsushi Seike, a labour economist at Keio university, says: "It is not a good use of taxpayers' money if amakudari people are welcomed by contractors only if they get more contracts. You can't justify such a system."
For years, the ruling Liberal Democratic party has denounced the practice but has proved unable or unwilling to stamp it out. Advisers to Junichiro Koizumi, prime minister, reacted to the recent arrests by dusting off plans to strengthen procedures for vetting appointments of former bureaucrats.
Sumio Mabuchi, of the opposition Democratic party of Japan, is not impressed. "Koizumi goes on and on about reform but in reality nothing has changed," he says. "When it comes to amakudari, the LDP can't alter its old ways."
"He's one guy fighting a whole system. You see the 'Yes Minister' phenomenon here in spades," says Prof Curtis, referring to the British television comedy that lampooned bureaucratic stratagems to stymie meddling politicians.
Yet Japan's bureaucratic retirement scheme is coming under strain nonetheless.
One reason is economic. A decade in the doldrums means there is not as much money to grease the works. One former trade ministry official who recently landed an amakudari position says the pay is nothing like it once was.
Hirano Hirofumi, chairman of Nikko Principal Investments, says bureaucrats can no longer look forward with confidence to a sinecure at retirement. "Now we have an entire generation of bureaucrats who are disenchanted with their career prospects," he says.
Second is the gradual scrapping, merging or privatisation of many of the institutions, such as the notorious Japan Highway Public Corporation, that provided the choicest amakudari opportunities.
The trend to smaller government cuts both ways, in some ways adding to the likelihood of migrating between the public and private sector. But Prof Curtis says gradual deregulation means that, in many industries, there is less in it for private companies to play the game. "Now companies want to get regulators off their back, so they're not that interested in creating amakudari positions," he says.
Masayoshi Son, president of Softbank, a broadband provider, has publicly railed against the practice of employing bureaucratic old boys, accusing telecommunications regulators of awarding spectrum only to companies that provide sinecures. He, for one, will never employ an amakudari, he says.
Prof Seike argues that, for all these reasons, the system is breaking down. Bureaucrats in their 30s and 40s, realising this, are joining the private sector in increasing numbers, he says.
Japan is thus gradually shifting from a system of institutionalised placement of bureaucrats to a more natural flow between the public and private sectors. But the transition will take years and requires implementing changes in employment practices, including a raising of the retirement age and an end to promotion based on seniority.
Until that happens, amakudari will continue to be seen as a necessary evil and prosecutors will have to keep a beady eye on the air-conditioners.
Under syndication arrangement with FE


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