One of the most important essays I've ever written:

An engine for corruption in my little town.

(Originally sent to Fukuzawa, Friends, ISSHO, UFJ, IRPS Alumni, HIBA, HAJET, and Signif on Sun, 5 Sep 1999)

Over the past decade and a half in Japan, there has been an economic institution called the "Dai-San Secutaa" ("Third Sector"), a hybrid of the First (public, i.e. government) and Second Sectors (private enterprise), which was proposed as a means to energize Japan's private sector through local venture capital-cum-tax money. In theory, the Dai-San Sector, under which a public-private consortium buys stocks to create a brand-new company, promised the best of both worlds--the economic targeting of bureaucrats complementing the management of profit-oriented businessmen and entrepreneurs.

Unfortunately, it didn't work out that way--instead the Dai-San Sector (D3S) became the best of both worlds for the corrupt. Government officials have wound up sinking taxes into white-elephant Bubble-Era projects, including theme parks, hotels, resorts, trade centers, and sundry small-town tourist traps, the majority of which remain operating despite perpetual losses. On the other hand the businessmen, shielded by regulations preventing their companies from being audited properly, escaped the responsibility of formal bankruptcy and saw their enterprises mutate into unsinkable public works projects, staffed by bureaucrats in makeshift amakudari posts. In sum, the D3S has encouraged corruption--littering the Japanese landscape with pseudo-businesses that pad the pockets of a select few, and this time more egregiously at the taxpayer's expense.

As my little town, Nanporo, would find out. In February 1999, our corrupt mayor, who tried to build an unwanted second golf course through a D3S venture, was voted out by an angry populace. Yet to this day, September 1999, he sits as head of a company that, despite the actions of a new administration and motions of concerned citizens' groups, can neither be exposed for graft nor audited into insolvency. This report will give a case study of the Nanporo Resort Kousha--in an attempt to describe the abuses of economics in a bureaucratocracy, one which favors big business yet ties its own hands when dealing with the aberrations it creates.

But enough eyebrow-raising claims from me--here's substantiation and background on the Dai-San Sector itself, from a source more trustworthy than I:

June 12, 1999, pg 74-9

BYLINE: Business partnerships between the public and private sectors sound like a good idea. They have not proved so in Japan.

THE Japanese public sector is notoriously hidebound, and is certainly not known for speedily and zealously embracing market forces. Some officials would no doubt prefer it to stay that way, citing past experience. What little the government has done to introduce private entrepreneurship into public business has had, at best, mixed results. One experiment in particular--the creation of "third-sector" companies, jointly financed by public and private owners--has been disastrous. With most of these companies now in the red, third-sector projects have become a byword for mismanagement, corruption and the abuse of bureaucratic power. Belatedly, the government is trying to clean up the mess.

It is a worryingly large one. According to a 1996 government survey, the latest available, Japan has 9,344 third-sector companies, employing 210,000 people. Their public capital comes mostly from local governments, which among them have invested Y3.8 trillion ($32 billion). Local governments have been able to invest in these projects for years. But the third sector really took off in the early 1980s, when Yasuhiro Nakasone, then prime minister, launched a programme of privatisation and deregulation, inspired by Britain and America, to import into government "the vitality of the private sector."

Unfortunately, influence seems to have flowed the other way. Of the 3,000-odd third-sector companies that have been set up under the commercial code, for example, more than two-thirds are loss-making.Yet only a handful have gone bankrupt--suggesting that local governments are compounding their mistakes by propping up duff projects, which then become a serious and permanent drain on the public purse.

That certainly seems to be the misfortune of the residents of Osaka, Japan's second-biggest city, where the municipal government (annual spending: Y4.2 trillion) has invested Y107 billion in 26 third-sector companies. Almost all, according to city officials, are losing money. In worst shape are two prominent property developments in the city's old industrial centre, the bay area--the Asian Trade Centre and the World Trade Centre. Because of their mountains of bank debt, their rents are exorbitant, and have kept occupancy rates low, despite efforts to fill the space with staff from other third-sector companies or public bodies. Equally ill-starred was the construction of a city-centre check-in counter for Osaka's new airport. The city has this year lent Y9.7 billion to these three projects, and city officials say they will make new "investments" of this size for the next five to six years. After that, they say, the projects will return to health.

One problem has been timing. Mr Nakasone's drive to encourage public-private partnerships coincided with the puffing up of Japan's stockmarket and property bubbles. These drew local governments into speculative property development, a tendency encouraged by the 1987 Resort Act, which gave the green light to third-sector developments involving theme parks, hotel complexes and the like. Slow growth and recession in the 1990s have shot to pieces the forecasts of likely demand for these projects.

Jobs for the boys

Yet the downturn cannot excuse shoddy management. As has become standard practice in Japan, the presidents of the third-sector companies that own the Asian Trade Centre, the World Trade Centre and the air terminal project are all city-government old boys, or "OBs", who are nearing retirement age and have been rewarded with cosy sinecures. In the worst cases, says Yoneko Matsuura, head of a local civic group, third-sector projects have sprung up precisely in order to create jobs for OBs. As she says, the rationale for the projects is "upside-down".

OB incompetence is exacerbated by moral hazard: management, private-sector partners and banks have (rightly) expected to be bailed out by the government when things go wrong. "A third-sector project should not go bankrupt," says an Osaka city official, tut-tutting at the local prefectural government's recent decision to pull the plug on one.

Underlying this is a more fundamental confusion about what third-sector projects are for: the public interest or private profit? Local governments in Japan seem inclined towards the former notion, yet the act of joint-stock incorporation creates expectations of the second.

A comparison with other countries sheds more light on Japan's problems. Various techniques have been adopted in a bid to increase efficiency in the public sector and reduce costs by transferring management control to profit-motivated private firms. They include privatisation, "build-operate-transfer" contracts (in which the private sector builds a project, runs it for a time to recoup costs and make a profit, and then transfers it to the public sector) and buying once-public services such as waste disposal or prison management from private companies. In Japan, however, the government has taken the lead in third-sector projects. So, perversely, the process has worked in reverse: it has resulted in an expansion of public-sector inefficiency, financed in part by the private sector.

Nor, sadly, is this the worst of it. One Osaka project, to build a Universal Studios theme park, has been dogged by allegations that the city has been helping one of its private-sector partners, Sumitomo Metal Industries, to avoid the cost of cleaning up the contaminated land on which the park is to be built. The city now says the site is clean but, since no independent inspections have been allowed, people suspect a botched job, with talk of dangerous concentrations of arsenic and cadmium underneath the spot set aside for the "Jurassic Park" feature. Two local residents recently filed a lawsuit to try to prevent construction work.

Last month, the ministry of home affairs at last published some guidelines for third-sector projects. These urge local governments to make sure that all parties to them clearly understand their risks and responsibilities; ensure value for money; react quickly when things go wrong; and consider asset sales, mergers and even bankruptcy proceedings as preferable to keeping bad projects in permanent intensive care.

Third-sector projects have shown, once again, that the public sector is run appallingly. For that reason, however, it would be a shame if Japan turned its back on public-private finance altogether. But it might be better in future to put private partners in the lead.


That should give some perspective on the scale of the problem. Now let's focus on one case:

A lesson in local politics

Long-time readers of my posts might remember last February and March 1999, when I documented in detail the toppling of our former mayor, a Mr Takeuchi Masakazu (74), after 24 years in office. This was due to a scandal where Takeuchi invested a huge sum of not only his own money to create the above-mentioned corporation, but also, word has it, unauthorized public monies into developing land into a golf course.

My previous posts on this issue (particularly on local election campaign dynamics and how they backfired on the incumbents) are available at http://www.debito.org/activistspage.html#nanporoelections, but for now, let me excerpt from and expound upon them for the purposes of this essay:



Nanporo-chou, located on a rice-paddied plain 30 kms east of Sapporo, Hokkaido, is a quiet town of 10,000 souls. After booming as a prewar train stop between coal-mining Yuubari and processing Ebetsu, it fell upon hard times when coal as a source of energy fell from favor and Yuubari's fossil reserves dried up. In the 1970's, Nanporo's railway line was closed, and the population dropped by half.

However, Takeuchi was elected mayor in 1975, and during his quarter-century tenure he turned things around--making Nanporo into both a bed-town for Sapporo and a tourist draw for the mainland. To the former, he offered enormous full-amenity plots of cheap land with likewise loans from the government (Koukyuu Kousha). To the latter, he took advantage of the golfing boom and offered cheap greens. Results were promising: Nanporo's population nearly doubled from 1992, creating a polity of 30% farmers, 30% local businessmen, and 40% new bed-towners. Moreover, new "Nanporo specialties" rose from the ashes: Nanporo Kimchee (pretty awful), Nanporo Riverside Golf course, and, most famously, Nanporo Onsen Hot Springs (the most famous draw--any tourist who mentions the town mentions the baths in the same breath). The onsen was thus deemed attractive for further development, which is where the Dai-San Sector comes in.

In 1991, a new company, the Nanporo Resort Kousha, was founded overnight to create the "Bansui Golf Resort" on farmland abutting the onsen area. A consortium of several credit institutions and local private investors targeted enormous tracts and asked the farmers on it to vacate their homes. Takeuchi, both the mayor and the largest private shareholder, sat at the helm as shachou (CEO). Plans steamrollered on until the Mayor's right-hand man, a Mr Izawa Toshimi (60), read the fine print, deemed the whole thing a foolish venture, and resigned in November 1998 in protest. This happened to be three months before Takeuchi's sixth mayoral term was up, and Izawa, eyeing the mayor's post, went around Nanporo to tell hundreds of people in their living rooms exactly why the Bansui Golf plan was unacceptable.

I attended one of his information sessions in January 1999 and the figures were damning. Bansui Golf would cost an astounding amount of money: 23.5 oku yen for starters (Spelling this number out in zeros gets numbing because there are nine of them. Just remember that one "oku" is approximately one million US dollars.) for starters, and this was not including clubhouse, equipment, or another 20% of the land that was still earmarked to be bought. The bottom line was that there would be over 80,000,000 yen (or around US $800,000--knock off two zeros from the smaller numbers to get approximate US dollars) payment per annum on interest alone, plus the projected 2 oku yen operational losses officially estimated for at least the next several years. Even optimistic guestimates projected a perpetually unrecouping enterprise: User fees for Bansui would be 8000 yen on weekdays and 12,800 yen on weekends--not including caddy. Riverside Golf, in operation for over a decade and an established name, has the same deal for 3700 yen and 6000 yen respectively. Nanporo would thus wind up competing with itself--appealing to tight-fisted Bubble-weary Japanese during Japan's longest postwar recession.

The ultimate question asked was: Did a town this size really need two golf courses? If this Bansui deal went through, the Nanporo town government would be shelling out around two million bucks a year for a red investment. Our property taxes, already amongst the highest in rural Japan, would rise further, our town arrears would look like Cleveland's in the 1970's, and cutbacks in public services would probably be necessary. All this to appeal to Tokyo tourists? No dice, said Izawa and the social movement gathering strength behind him. Meanwhile, Takeuchi was hard at work; only weeks away from the election, a temporary office was erected at the site of the resort, land levelled and trees ripped down, and trucks were hauling frozen earth, despite the dead of winter, from dawn to dusk, seven days a week.

On February 28, 1999, after a heated campaign unaffected by subzero weather, Izawa was elected in a landslide as part of a breathtaking stroke of people power (I'm not kidding. Go to the URL above if you think I'm gushing.). For the first time in a generation Nanporo had a new mayor, whose express mandate was to stop Bansui. Takeuchi was drummed out of office and was expected to hand the reins of Nanporo Resort Kousha (NRK) over to Izawa.

However, no big bangs have occurred. To this day, September 1999, Takeuchi still sits at the helm of NRK, refusing to step down because he is the biggest investor. Mayor Izawa, on the advice of his legal council, declined to become the new CEO. Meanwhile, the Bansui site, work ceasing perpetually on April 1, still sits flat, unused, and overgrown, yet NRK has not been, and apparently cannot be, formally declared bankrupt.

All of this, I hear you say, is just rotten economics and politics--and says nothing incriminating about the D3S as an institution. But accompany me as I describe our efforts, as concerned citizens, to blow the cover off this operation, and you will see how we were stymied precisely because of the complications arising from this public-private hybrid.



We, the founding members of the Nanporo Machi-Zukuri Nettowaaku no Kai (chairman: my perpetual teammate on all these people-power escapades, Suzuki Masatoshi) and the Chihou Bunken Forum (chairman: David Aldwinckle, believe it or not), were representing two citizens groups charged with increasing communication and interplay of ideas between citizens, bureaucrats, and town assemblypeople. Just to give you an idea how serious we are, for the record I give you select dates of some of our recent doings and topics discussed:

---April 4, 1999. Chihou Bunken Forum sponsored a talk on the meaning of democratic institutions. Hokudai Prof Kanbara talked about Jichitai (organizations fostering regional self-government) and how to encourage more direct local democracy.

---April 10, 1999. Town Meeting (in the style of New England town meetings) for citizen input on a) the golf course, b) the ignored new shopping center proposal, c) the crappy local secondary education system, and d) the lack of enterprise between cash-crop farmers and hungry bed-towners.

---April 24, 1999. Volunteers from both groups met to hammer out a proposal for using the Bansui site as a public park.

---May 15, 1999. Chihou Bunken Forum sponsored a talk on how to design a supermarket and bring in a corporate sponsor. My friend, Mr Kokubun of Machi Seisakushitsu KK, actually participated two years ago in the new Nanporo supermarket plan (one of the carrots dangled in front of potential bed-towners), watching negotiations with retailer Seikyou fizzle out and leave the town high and dry. He outlined his experiences with joint-venture supermarketing in the Hokkaido outback.

---May 16, 1999. Town Meeting to finalize the proposal for the Bansui park. A map of the golf course was filled in with sections devoted to grassland, two lakes, a campground, a waterpark, a public-use garden, a sledding hill, a huge parking lot, a cyclepath, a special park where dogs can poop with impunity, and (my contribution) a forest area where Nanporo citizens every year can get free trees from the government and plant them wherever they like within the plot; modelled on Arbor Day, this would save labor costs and increase citizen involvement and the randomness of planting. The proposed name of this park? "MORI-AGARI KOUEN" (also my contribution. Who else would think of a pun this bad? And where else would it fly?!) By June 22, the scematic was officially submitted to the town assembly. This so that Takeuchi's supporters could not claim the lack of an alternative plan. Reactions on a personal level from bureaucrats were very promising.

---May 18, 1999. Suzuki and Aldwinckle met with a student of mine, a CPA, to get advice on drafts of a Juumin Kansa Seikyuu ("Residents' Audit Demand") we intend to serve Nanporo Resort Kousha. It turns out that by law, we, as an organization of local citizens, are legally entitled to demand disclosure of specific uses of local public monies (yes it's true). We figure that since NRK is a D3S entity and therefore public, we have the right as citizens to demand to see its books. NRK would be legally obligated to answer within a few months, and refusal to do so would only make it look worse if taken to court. Aldwinckle spent next evening going from door to door delivering copies of draft and explanation of motivation to more than 250 homes in the neighboorhood. Other neighborhoods get copies through local chounaikai (neighborhood associations), which I also happen to be vice-chairman of.

---May 21, 1999. Suzuki, Aldwinckle, and one more concerned private citizen submitted inkanned form of Residents' Audit to Town Hall. More on this below.

---June 14, 1999. Suzuki, Aldwinckle, and other members of the Chihou Bunken Forum met with Mr Matsuda, head of the Nanporo local businesses association, to prepare for an event in autumn 1999 (since nobody, least of all I, wants to attend political meetings during bikable Hokkaido summers). Topic: A summit between local business heads--who could negotiate with supermarket chains better than the bureaucrats--and housewives, who can best determine what household goods are in demand.

All of the above formal meetings were held gratis on a weekend at the local citizen's hall, were open to all-comers, and had Mayor Izawa and a few conscientious town councillors attending (having to individually phone and invite the others--the Takeuchi supporters--was my job, and hearing them
squirm out by claiming they had no obligation to come made my skin crawl). We had at least a dozen people total at the Town Meetings and up to 40 the Fora. The proceedings of both were reported in capsule summary (written up by me) in our local monthly town newspaper, the Kouhou, with FAX contacts for those who wanted to know more. The FAXed details (written up by Suzuki) were also displayed on a big handmade billboard outside our favorite Nanporo pub, placed free of charge in several public buildings, and handed in person by me to some of the more slimy town reps at assembly meetings (who, bemusedly, took them!).

Phew. The point is that we are not just some agit-prop types who sit snivelling at the sidelines waiting for people to support us (I don't have faith in most people's stamina with social movements, anyway). We are trying to be high-profile populist PACs pushing with all our might to help things to get better on the governmental level. Which is all the more aggravating when the new mayor starts saying how his hands are tied:



(I combine and paraphrase the conversations of these meetings to save space.)

Suzuki and Aldwinckle met both times with several prominent town officials in his office. They were informal meetings, the latter with Suzuki in a tee-shirt and me in bicycle shorts (I had just cycled in from school after class; it broke the ice). Suzuki opened with:

"Well, how are things looking? Is NRK going to be disbanded?"

Mayor Izawa: "Well, things don't look good there. My lawyers have advised me that we aren't able to divulge the full details of the company's finances. Even if I were CEO, I couldn't publicize any information about private investors because of infringement of privacy. And assuming the helm will give the tabloid press me as an effigy to burn."

"Tabloid press?"

Another article, from goro-shinbun (racketeering newspaper) Hoppou Jaanaru, had since come out with another exposee. The first hack job, which came out before the election (see abovementioned URL), did a mock-interview depicting Izawa as devious, U-turning to make political hay despite his initial support for the golf course, and lionized Takeuchi for all the work he had done turning Nanporo's fortunes around. Arriving free in every Nanporo mailbox, it still did not save Takeuchi at the polls. The current hack job was saying that Izawa had fingers in the cookie jar (and his seal on old NRK forms) and was thus a complicit hypocrite.

Meanwhile, the Hokkaido Shinbun newspaper and even NHK TV were doing specials on D3S with a focus on Nanporo, calling Takeuchi "the CEO that wouldn't leave". Izawa was looking a lot rosier for it. "So you see, becoming the boss is not an avenue I want to go down."

"So show us what public monies have gone in. It's a public company, isn't it?"

"That's just it. It is and it isn't. As a Dai-San Sector company, its auditing status depends how much of the investment is private. At the start, public monies were going to comprise about two-thirds of the budget, which would have made it a public institution and thus auditable by us. But the banks backed out when they saw the political storm brewing, and technicallly so has the Nanporo town government by withholding earmarked tax monies. This means that about 60% of the money technically invested as 'shusshikin' is from private investors, making NRK a private institution--something we cannot easily audit and publicize. Again, it's a matter of investors' privacy."

"So why not have the national tax authorities look into it? Or some of the auditors you have working independently for the town government?"

"Well, we can't just sic the tax office on a company because we *suspect* it is doing something fishy. We need concrete evidence. We don't have that. And the laws covering investigating this sort of an incident are vague anyway when it comes to the D3S."

I found this a very flimsy excuse, with all I have heard about the arbitrary power Japanese bureaucrats have for a little "administrative guidance". The Japanese government at least on the national level has few compunctions about whaling on companies they want to make an example of. There must be more to this foot-dragging than that, I thought.

Suzuki: "So how much money has been used up? Their offices still have lights on, so salaries are being paid."

"About 1.9 oku yen so far. Out of the 4 oku yen of town monies earmarked for eventual use..."


I'll interject something here because it is important but should not be construed as a quote from Izawa. I have heard from several unofficial but reliable channels that NRK has in fact been doing dodgy things. This information has not officially been made public yet, but here's how it goes. Bear with me as it is complicated:

The golf course was projected, again, to cost 23.5 oku yen to complete. Banks were going to finance over half of this to the tune of 17 oku yen--with 10 oku yen from Hokushinren, the remainder from other regional banks (including Sorachi Shinkin, Senwa Shinyou Kumiai, and Sorachi Shinyou Kougyou Kumiai).

But there was a catch. The private sector, in the form of Takeuchi and other cronies, had to make up the rest, coming to 6.5 oku yen, or the banks would back out of the deal. The privates could only come up with 2.5 oku yen, so the town stumped up the difference, approving that package of 4 oku yen in the form of savings (chou no chokin) and "financial adjustment monies" (zaisei chousei kikin). This was money earmarked (yakutei) and approved by the town assembly, but, mind you, not money at Takeuchi's disposal. All subsequent withdrawals for specific purposes would have to be approved a second time by the town assembly.

However, Takeuchi seemed to have quite a bit of financial leverage behind him. For example, the course site has 65 hectares, of which 4 were Takeuchi's privately; Takeuchi sold them for a tidy 12.5% markup to the town. Since a hectare of farmland costs about 4,500,000 yen, this one deal that we know of gave him some slush funds to begin with. There are a plethora of other unconfirmed kickbacks and wheeler-dealing that I have heard of, but let's cut to the bone: The most important thing about this arrangement was that legally *the golf course land became the property of NRK*, which would be the lynchpin to the financial abuse.

In January 1999, when Izawa was shaping up to be a serious contender for the mayoral seat, Takeuchi, as I said, started doing construction every day on the frozen site. That construction was done by, among others, Sekikawa Kensetsu KK, whose boss, Mr Sekikawa, just happened to be the second-in-command (tori shimari yaku) at NRK.

Resolved: Takeuchi lost the election, the banks backed out of the deal, and construction screeched to a halt. However, unresolved is that Sekikawa allegedly presented a bill for 5 oku yen (a million bucks more than the entire town monies earmarked for the project!) to the town assembly, which to this day the latter refuses to pay.

But surely these earthmovers didn't work for nothing, people say. So from where did Takeuchi get the money?

Rumor has it, which we cannot audit to confirm, that Takeuchi put the 65 hectares as collateral on an outside mortgage (teitouken), which means that NRK was borrowing from Peter to pay Paul.

And with this, the system becomes a closed loop. If Nanporo town plays ball with NRK, the golf course gets built. If Nanporo buys NRK out so that the golf course will not get built, the former will have to swallow debts of 1) the 1.9 oku yen already legally spent, 2) 2.8 oku yen on the land (tochi daikin), 3) 1.2 oku yen on buying the rights from a third-party landowner (I won't get into that here), and 4) the bill of 5 oku yen from Sekikawa. The mind boggles at the sums, but the point is that NRK has become a cost multiplier--using town money to triple by millions of dollars the use-rights of land that once mostly belonged to the town anyway.

Here's the kicker. If Nanporo finds a way to have NRK declared bankrupt, the town still loses. The 1 oku yen NRK capitalization from the town disappears, the 1.9 oku yen already legally spent becomes a sunk cost, and--get this--the land does not revert to the town anyway. Why? If suspicions are correct, it will be taken by the creditors with whom Takeuchi is suspected to have a mortgage with.

Yet Takeuchi is still, according to Izawa and the town bureaucrats, above auditing due to "lack of concrete evidence". This is why the Dai-San Sector is the ultimate culprit in this case.

Let's sum up: Because of its razing of the firewall between public works and private enterprise, a powerful public official, with access to votes and taxes, could set up a company with a far larger credit line than the average businessman, and buy what would turn out to be collateral. As the company was legally a private enterprise, that collateral was at the private disposal of the official and could be used without public permission. Then once the deal went sour, the taxpayer faced the choice of extortionate assets or pure debts. Yet this very same public official the remains immune from taking responsibility--under the same rules that encouraged his corruption protect him from investigation. The Japanese courts, bless their procrastinating hearts, are going to have to settle this.

Thus the Dai-San Sector is probably the worst thing to happen to my little town.


Back to the conversation with Mayor Izawa, who said: "So you see, we can't really do anything too hastily. We are proceeding prudently."

Suzuki was sympathetic but both he and I were expecting this sort of hand-wringing. "Debito and I are here to tell you that we're going to be carrying out a Juumin Kansa Seikyuu. Here's a copy of it. Just so that you aren't surprised."

Izawa received it with a smile, making it clear where he stood. "I humbly receive this. As you know, I officially cannot condone what you're doing. But we cannot stop private citizens from doing what they feel they must."

That was also the approach that we thought they would take. They would be riding on our coattails.

"We will also go to the Nanporo Resort Kousha office itself and ask to see their books."

"I don't know how far that will get you, but understood."

I had been silent throughout but, as always (and Suzuki always smiles when I get started), I had to make a speech. From the common sense garnered as an undergraduate government major and an avid watcher of American political style:

"Mayor Izawa, I understand your position, but please take into account what you are sitting on: a new administration. You are the first new political leader here in a generation. People are expecting a lot of you and you have the mandate to deliver. It's your political honeymoon. You shouldn't squander your political capital by being prudent. People in this country don't trust politicians anymore. The longer you wait, the more people will assume you are in with Takeuchi on this, and the more cynical Nanporo will become. For Nanporo's sake, I encourage you to take decisive steps to eliminate this company before it sucks us dry."

"Zenshou shimasu" ("I will do my best, but give no guarantees of a favorable outcome"). That was precisely the answer I was expecting again. Three for three.



"Are you sure this is the right place?" We were standing on the second floor of the clubhouse of Riverside Golf. Nothing to be seen but a restaurant, an enclosed kitchen, and toilet space.

Suzuki asked a cleaning lady where NRK's office was, and she pointed to a door of a temporary wall erected to block out the restaurant's windowspace. There was no NRK sign on the door or the walls, nothing at all indicating that there was a multi-million dollar enterprise here.

"Somebody should be here by now," said Suzuki. " I called yesterday afternoon and nobody answered, so I left an message on their answering machine. You wouldn't believe how difficult it was to find their number. They're unlisted in the phone book. I even dialed directory assistance at 104 and the operator couldn't find the company listed."

I was aghast. "That's incredible! So how did you get the number?"

"I had to call Riverside Golf." Suzuki knocked on the door and a voice beckoned us in.

It was a very sparse office, with desks, a sofa-and-chairs combination for conferences, and a bureau with a clock atop. Nothing on the walls, some box flotsam on the floors. The office hardly looked lived-in at all.

"My name's Suzuki, this is Arudouinkuru, and I called yesterday and left a message."

"I got it, thanks. Name's Umajiri [pseudonym, of course]. Have a seat. What's the business?"

Suzuki: "We are Nanporo residents of XXX-machi. Arudouinkuru here's naturalizing. Nanporo Resort Kousha is using public funding and we would like you to show us your financial details."

Umajiri looked not a little shocked. "You know that I am under no obligation to do that. We are a private company and are not obligated to show private citizens our books."

Aldwinckle: "Come on now, sir, you know that is not entirely true. You are also a public company. You are using our taxes. We as town residents want to know how our money is being spent."

Umajiri: "Well, I'll have to talk it over with Takeuchi-shachou, but he will not be coming in today. But I think you know he will tell you to take it up with the town government."

Suzuki: "That's precisely what we intend to do. We are readying a Juumin Kansa Seikyuu."

Umajiri tried not to betray a gulp. "I will tell him that."

"Okay, Debito, I guess we're not going to get any more answers, so let's go."

On our way out I asked for a business card. "Sorry," said Umajiri, "we don't have meishi."

"What? I've never heard of a Japanese company without meishi! Are you for real?!"

"C'mon, Debito, let's get out of here."

I was shaking my head as we went down the stairs. "I can't believe this. No company name on the door, no meishi, not even a phone listing at 104! This company is the embodiment of corruption! I just want to go home and take a shower."

"Well, let's go file our Residents' Audit and get that ball rolling. Like it or not, by law Takeuchi will have to answer it, and if he refuses it only looks bad on him."


MAY 21 AND 24, 1999.

We went to the third floor of the town hall into the Gikai Jimukyoku, and presented the form to Mr Asegashira [again, pseudonym], who took one look, then scrambled his men to find the proper forms. Asegashira spent a few minutes sucking teeth before saying:

"I'm sorry, but this form. I can't accept it."

Suzuki: "Have you actually dealt with a Juumin Kansa Seikyuu before?"

"No, I haven't. I'm new to this post."

Suzuki: "Well then, please don't give us such a ready answer. We are willing to work with you on this, but please don't dismiss us so quickly. Accept the form for the time being and we'll talk about improving it later."

Asegashira: "Look, I can't accept this unless it's done right. It's not official-looking, it's not exactly the right language..."

Aldwinckle: "We had a CPA check it out. Other than the angry tone of the language, he said there should be no problem."

Asegashira's underlings were rifling through books and bringing out the magnifying glasses, but the point was this: "Look, Messrs Suzuki and Arudouinkuru, unless this is done correctly from the start, the form will become invalid and whatever you want to accomplish will become moot."

"Okay." We agreed to come back on Monday to listen to suggstions on how things could be done right. Three days later we found Asaegashira and his junior with photocopied parts of the law highlighting error after error.

Asegashira: "Language aside, the most problematic thing with this Juumin Kansa Seikyuu is that it is not addressed to anyone. You must have a name on here so people know to whom you are addressing."

"Can't we just address it to 'Nanporo Resort Kousha'?"

"No, there must be a name on it."

"Okay, we'll put Mr Takeuchi's name."

"Sorry, you can't do that. He's a private individual and this would be a violation of his privacy. As this Juumin Kansa Seikyu can only be applied to public entities, you must choose a public official like Mayor Izawa."

"We don't want to do that. He has already told us he cannot make the information public, and he's not the boss of the company anyway."

"Then I'm sorry. You can't use a Juumin Kansa Seikyuu in this case."

I was furious. "C'mon, stop being obstructionist! Do you not live in this town?!"

"I do," said Asegashira's assistant.

"Well, then, you should be concerned that these are your taxes being spent on corruption! Why are you stopping us when you know we are doing the right thing?!"

Asegashira smiled. "As a civil servant, I cannot have personal opinions about things like this. I can only follow the rules."

"Well, then please use those rules in our favor. You know them better than we do! Please, I beg you, give us some guidance."

"That's what I'm about to do." And Asegashira then produced a number of photocopies of different forms that could be used in our old audit's stead. "Rewrite things acceptibly and we'll accept them."

We walked out a while later feeling our drive blunted. "Well, what now?" said I.

Suzuki was not deterred. "Well, we've still written the basic text of what we want to say--it's just kneading it into the right form. Word will get around to Takeuchi that we are threatening an audit. He'll be running scared and know that if he continues construction, we'll just redouble our efforts. And of course, don't forget, we can bypass this system entirely and sue the company in court. Anyway, don't worry about the audit. We'll get around to it."


That was now over three months ago; that's the thing about those round to-its. June and July are busy months for me as an educator, so I put all this on the backburner. By August I'm so burned out I absolutely refuse to work, so here it is September and I am back on the job. And the first thing I'm going to do is report this whole scam to the outside world, via this email. Suzuki and I have other plans in the pipeline.

Meanwhile, the town awaits Takeuchi's next move. It doesn't seem to be looming. The summer is past and Bansui remains untouched. The temporary on-site office looks empty whenever I pass it on my bike to work--even its outdoor port-a-john has been carted away. The other quasi-office at Riverside Golf Course was filling with boxes when I peeked in there last week. Hence, the company is currently moribund, it would seem.

But Nanporo Resort Kousha is not yet dissolved, meaning that it could very well come back to life if funds reappear. And there's the bottom line. This entire scam would probably not have happened so egregiously, if at all, if NRK were either Public or Private Sector. But in the amalgam of the two, the Japanese government has helped create a creature that is beholden to neither, able to go malignantly dormant or destructively regenerative at a moment's notice. The most ironic thing of all is this: the Dai-San Sector, in its current abusable capacities, ultimately threatens the ruin of the local economies they were meant to save.

Dave Aldwinckle

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