Amakudari to Construction Firms

MOC tends to rank second to the Finance Ministry among the country's central state agencies in the number of its former officials who find reemployment in private-sector firms. The construction and real-estate industries provide the majority of landing spots for MOC's ex-officials, many of whom alight into positions as "advisors" to such firms. In most cases, the final posting within the bureaucracy determines an ex-bureaucrat's level of reemployment at a construction firm. For example, an official retiring at the level of bureau chief in MOC's central headquarters could expect to descend into an executive director post (with a good chance of eventually becoming company vice-president), while a former regional bureau chief would likely secure a managing director slot with a construction company. This custom only increases the bureaucrats' incentive to maximize promotional possibilities during their truncated careers in government service.

From the vantage of a public works contractor, the benefits of employing former bureaucrats are by no means trivial. The "descended angels" attended elite schools and have considerable expertise and information, but many close observers doubt that these qualifications

are as important to the new employers as the connections and personal networks these former officials command. For MOC is in the position to give what is called "candy" to favored contractors who employ its retired bureaucrats, treats like preferential decisions on bidder designations or leaks concerning the government's ceiling price for public works projects. As a former president of a general contracting company explains, "There is a thing called a souvenir project (omiyage koji ). It involves the Construction Ministry's gift of a project [to a particular contractor] in order to secure an amakudari spot for a retired official. There is talk that such projects have been worth as much as one billion yen" (Asahi shinbun , 16 Nov. 1993). So it makes good sense for public works contractors to employ someone with friends who work in the "candy store." In the words of one observer: "with regard to public works, in the final analysis connections to the contracting agency are important. For that reason [firms] energetically scout out retired upper officials" (Minami 1981, 25).

Over the years an informal head-hunting system has emerged to satisfy this demand. The process begins when a firm that hopes to hire an "old boy" sends what has come to be known as a "requisition for spare parts" to the Personnel Section of MOC's Minister's Secretariat. These so-called spare parts—or, more correctly, "spare employees"—are bureaucrats nearing the age of retirement. The request for spare parts implores MOC to "pass along an honorable official to this humble company" (Asahi shinbun , 16 Nov. 1993). In this regard, MOC's Personnel Section functions as an outplacement agency for its retiring officials. Indeed, until the increased scrutiny aroused by the zenekon scandal, the Personnel Section prepared and sent out documents requesting specific conditions of employment for descending bureaucrats. Companies wishing to employ former MOC officials had to promise that their salary would be commensurate to that of their final ministerial posting, and provisions were also made for elite bureaucrats to receive such fringe benefits as a company car, personal secretary, and a private office.

The personnel rosters of upper management in Japan's major construction firms reflects the pervasiveness of amakudari . In 1993, for example, former MOC officials held the posts of president of Kajima Corporation, chair of Sumitomo Construction, and vice-president of

Tobishima Corporation. According to a survey taken by Tokyo Commercial Research, 363 of the 2,021 officials (or 18 percent) of the 61 large general contracting firms listed on the Tokyo Stock Exchange in 1992 were former officials of government agencies or quasi-public corporations. Of these, 55 were ex-officials of MOC, while 44 were descendees from the Japan Highway Corporation, and 36 had retired from the Japan Housing Corporation (Asahi shinbun , 16 Nov. 1993).

A report issued in the early 1980s revealed that "imported personnel" with backgrounds in the public service filled the top nine positions at Kajima Corporation ("Kensetsu gyokai" 1982, 179). By way of contrast, Takenaka Corporation, another of the Big Six, had a longstanding policy of not importing "old boys" from MOC, a rule that allegedly contributed to the company's relatively paltry harvest of public works contracts (Minami 1981, 29). Not surprisingly, firms employing large numbers of former public works bureaucrats tend to derive a relatively large share of their revenues from government contracts. In 1981, for instance, the top officials of the five largest civil engineering contractors included 52 ex-officials, more than two-thirds of whom had descended from careers in MOC (Amakudari hakusho 1982, 90–94). The system is replicated at the prefectural and local levels as well (Yoshida 1984, 220).

MOC's retired upper officials, particularly the technicians, are in such demand that a popular saving holds that there are "seven suitors for each daughter," and a successful contractor will boast of having "won the shogun's daughter" (Honda 1974, 197–98). And the dowry these brides bring their grooms is access to information on confidential government projects. As an official of a major construction firm admitted, "The estimated cost for a public works project is always contracted at the maximal budgetary level. Since a bureaucrat will lose his job if he does not use the full budget, he will leak information to contractors. In many cases the bid will come in at 98 to 99 percent of the estimated cost" (Shukan gendai , 1 May 1982, 57). By tacit agreement, each firm that takes in one of MOC's "old boys" is guaranteed at least one large-scale public works project (Asano et al. 1977, 29–30). Since the revenues from a single major project, such as the construction of a dam or a highway, may be sufficient to ensure the sol-

vency of a firm for up to a decade, the benefits of this "welfare pension in-hand project" system far outweigh the salaries a company pays the ex-officials.

Over the years, a host of cases have come to light involving dubious links between retired bureaucrats and the awarding of public works contracts. Instances have been reported in such diverse locales as Hokkaido), Kagawa, Ishikawa, Miyagi, Nagano, Niigata, Oita, and Toyama prefectures (Y. Ito 1978, 67; Minami 1981, 108; Yamamoto 1975, 138–39). In Hiroshima Prefecture, for example, on 15 December 1974, Kumagai Gumi emerged as the lowest bidder in the competition for a project to widen a road in Fukuyama City. The ¥162.7-million tender submitted by the firm was exactly the same as MOC's confidential estimated cost of the project. Only a few months earlier, a former director of MOC's Fukuyama Project Office had "descended from heaven" into a position with the company, a coincidence that prompted a local contractor to assert that it is "clearly impossible to imagine that information did not pass into the hands of Kumagai Gumi" (Jin et al. 1981, 196).

One study of large construction firms that employ considerable numbers of former government officials reported the following correlations (Jin et al. 1981, 179):

The most striking case concerned Totetsu Kogyo, a firm with strong ties to the since privatized Japan National Railways Corporation: former government officials counted for fully 80 percent of the firm's 24 top management posts, and public works contracts represented 80 percent of its total revenues (ibid. 140).

Amakudari is not the exclusive reserve of former central state

bureaucrats and major construction contractors. In fact, retired bureaucrats at the prefectural and municipal levels also descend into positions with local construction contractors. For instance, some 124 employees of the 60 firms belonging to the "Hama Yukai" (Yokohama Friendship Association) were retired officials from the Yokohama City government. These ex-officials allegedly acted as a pipeline for "informal information" pertaining to municipal public works projects (Asahi shinbun , 19 Sept. 1993). Table 2 summarizes the reemployment situations of ex-officials of the Tokyo Metropolitan government.

Amakudari to private-sector firms is controversial and demands for reform have been voiced over the years. In August 1993, as the zenekon scandal was widening, MOC announced that its officials above the rank of section chief (or department head among regional construc-

tion bureau officials) would exercise "self-restraint" (jishuku ) with regard to reemployment with general construction contractors until the resolution of the scandal. A number of prefectural governments quickly followed suit and announced reform measures aimed at stemming the flow of confidential information to construction firms (Asahi shinbun , 11 Oct. 1993). In addition, the public outcry aroused by the zenekon scandal forced MOC to announce that its Personnel Section would no longer specify the conditions of employment, such as the use of company cars and private offices, for officials seeking reemployment in construction firms. I will discuss the consequences of these modest and impermanent institutional modifications in the concluding chapter.