Los Angeles Times (LT) - THURSDAY December 5, 1996 Edition: Home Edition Page: 6 Pt. A Word Count: 705
Sonni Efron; Times Staff Writer

Police say Nobuharu Okamitsu, 57, who resigned last month as administrative vice minister, also received a golf club membership and the use of two cars and had the nursing home developer pay to remodel the kitchen in his condominium while he greased the way for the developer to collect about $3 million in subsidies.

Another former Health Ministry official, Shigeru Chatani, also was arrested for allegedly taking $27,000 in bribes, and a third official was demoted this week after admitting he had borrowed money from the nursing home developer, Hiroshi Koyama. A police search was underway early today at the Health Ministry.

The widening scandal has not bruised Prime Minister Ryutaro Hashimoto. A new survey by the newspaper Yomiuri Shimbun found a 56.5% approval rating for his new Cabinet, up 11 percentage points from a September survey. And Hashimoto emerged unscathed this week after being questioned in parliament about the scandal.

Some analysts believe the adroit Hashimoto may actually benefit from the corruption case, which merely underscores the need for the bureaucratic reforms he has pledged to enact.

"This will drive and encourage Hashimoto's reforms," said Seiichi Ota, second secretary of Hashimoto's Liberal Democratic Party (LDP), upon hearing of Okamitsu's arrest. "The enemy is the bureaucracy. He can say, 'Look what bad things they are doing,' and push through his reforms."

Moreover, Japanese newspaper reports last month that Hashimoto, his new health minister, Junichiro Koizumi, and 17 other politicians had received political contributions from nursing home developer Koyama have not been substantiated.

Hashimoto and Koizumi have acknowledged receiving $63,000 and $31,000, respectively, in contributions from two medical industry lobbying groups, which handed out a total of $1 million to politicians with ties to the Health Ministry. However, the donations were legal and properly recorded, and no evidence has emerged to back news reports that the lobbyists' money originated with Koyama. The lobbyists' financial filings do not indicate the source of their funds.

Nevertheless, opposition lawmakers jumped on the issue Tuesday, with Communist Party leader Tetsuzo Fuwa calling for a ban on political contributions by corporations and special interest groups. Fuwa argued that such contributions, whatever their legal status, present a serious ethical problem.

Koizumi, the health minister, bristled at the implication that he had done anything improper, and both he and the prime minister disputed the need for change in Japan's political financing laws.

However, the LDP's Ota said his party's ranks are full of former bureaucrats who have used their close ties to the industries they once supervised to raise money needed to run for public office.

"About a third of the LDP's candidates are former bureaucrats, and I don't think all of them can be proud of the way they raised their money," Ota said.

Japan's bureaucracy is often criticized for wielding unchecked power with little accountability at the expense of elected politicians, who often have little to do with making policy. Nevertheless, the elite bureaucrats have generally been seen by the public as intelligent, competent and honest--if arrogant--while politicians were generally perceived as tainted by their financial ties with industry.

Now a spate of bureaucratic bumbling and scandals in several ministries has blackened the reputations of "public servants."

The Finance Ministry is under fire for failure to anticipate the financial collapse of institutions it supervised, leading to expensive bailouts by taxpayers. The prestigious ministry also had its own corruption case last year.

The Ministry of Trade and Industry, meanwhile, is reeling from allegations that oil wholesaler Junichi Izui, under arrest for massive tax evasion, wined and dined senior ministry officials and lavished contributions on LDP politicians.

Most shocking to many Japanese, the Health Ministry allowed a drug company to continue selling unheated blood products that it knew might be tainted with the human immunodeficiency virus, even after safer substitutes were available. As a result, about 1,800 Japanese hemophiliacs were infected by HIV, the virus that causes AIDS.

Ironically, Okamitsu was appointed to the Health Ministry's top administrative post in July to restore public faith in the agency.

CAPTION: Photo: Nobuharu Okamitsu, center, is flanked by police after his arrest. Reuters

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