TOKYO REPORT: MOF Sets Up Compliance Panel to Regain Trust

December 26, 2018

Tokyo--The Ministry of Finance has set up a "compliance promotion panel" to regain public trust lost after a series of scandals including alternations to ministry records related to a controversial state land sale to private school operator Moritomo Gakuen.

In the wake of the Moritomo Gakuen scandal, in which land in western Japan was sold at a steep discount to the private school operator once linked to Prime Minister Shinzo Abe's wife, Akie, senior MOF bureaucrat Nobuhisa Sagawa resigned as head of the National Tax Agency in March, while officials involved in falsifying or destroying ministry records were punished.

In an additional blow to the MOF, Vice Finance Minister Junichi Fukuda, the top bureaucrat at the ministry, stepped down in April amid swirling accusations that he had sexually harassed a female journalist.

The panel, headed by Reiko Akiike, an adviser from the Boston Consulting Group, is tasked with transforming the MOF into a scandal-free organization by infusing outside perspectives.

In October, the panel compiled a set of reform proposals featuring a "360-degree evaluation" system of reviewing bureaucrats' work performance from multilateral viewpoints including not only those of superiors but also subordinates and other colleagues, to check for problems such as improper instructions by senior bureaucrats and sexual harassment. The ministry will introduce the system at its head office on a trial basis in January and put it into full use later in 2019.

The proposals also include a compliance education program for senior ministry officials and an upgrading of the whistle-blowing system.

Concerns continue, however, that the proposed reforms will end up a pie in the sky. A ministry survey of some 9,400 officials, including those at local finance bureaus, found many complaints that past reform proposals had not been put in execution and that senior bureaucrats must take the initiative in reforming the MOF.

In the meantime, Finance Minister Taro Aso maintains a noncommittal stance on the scandals, adding fuel to calls for his resignation from opposition parties.

Aso voluntary returned his one-year salary of 1.7 million yen as a cabinet minister over the Moritomo Gakuen scandal in June. Asked by a reporter why the scandal had occurred, however, he said, "I wish I could know."

In the extraordinary parliamentary session convened in the autumn after Abe reshuffled his cabinet, Aso rejected opposition parties' calls for his resignation, saying, "I will fulfill my duties at full power."

As the minister in charge, Aso "should endeavor to offer explanations convincing to the public," Hideaki Tanaka, a former MOF bureaucrat and now professor at the Graduate School of Governance Studies of Meiji University, said, criticizing Aso for remarks taken to suggest that he has no intention of further probes into the document tampering.

Noting that large companies have come to assign a considerable number of employees to governance policies and internal controls, Naohiko Matsuo, a lawyer familiar with such issues, said that the MOF "needs to establish an independent and high-ranking post for the promotion of thorough compliance." Jiji Press