Wednesday, September 10, 2008

Two Scandals and a Few Tips for the DPJ

Janne drew a parallel between two examples of government involvement in fraudulent activity in an earlier comment. Here’s some background that explains the differences, and a few unsolicited tips for the DPJ on exploiting them to its advantage nevertheless.
There’s actually a sensible reason for MAFF involvement in the Sumitomo-Mikasa transaction that ended up with 145 tons of defective rice being passed on to shochu* manufacturers. The government—to be more specific, the Ministry of Agriculture, Forestry and Fisheries (MAFF)—is responsible for all tariff-free rice imports under WTO minimum access requirements. The government uses an auction system, under which trading companies undertake to find the rice and import the rice for the government, which turns around and sells the minimum access rice to domestic businesses for processing into shochu, rice cakes, glue and other rice products. The government is careful not to allow the rice itself to enter the retail market, where it would come into competition with domestic rice. Unfortunately, 145 tons out of 7,000 tons that Sumitomo imported from Thailand on behalf of the Japanese government had became infected with molds. Under the terms of the contract, Sumitomo had to purchase the infected rice. In order to keep the supply chain in order and the merchandise flowing—remember, there is a WTO obligation to fulfill—a MAFF official suggested that Sumitomo use Mikasa Foods, one of the few rice processors with the processing capacity for non-food end use—glue as a suitable outlet for the defective rice. Unbeknownst to MAFF, Mikasa Foods had hit on the highly lucrative business model of buying up defective rice on the cheap far beyond its legitimate processing capacity and passing it off to unsuspecting food processing businesses at high mark-ups. Someone, somewhere, appears to have snitched.

Then, is MAFF merely an innocent bystander in just one transaction in a case of wholesale fraud? Not quite. According to a Yomiuri report, MAFF has conducted 96 inspections since 2004, when Mikasa Foods began passing on the defective rice. However, all the inspections have been announced beforehand, giving Mikasa Foods ample time to engineer a cover-up. Not anymore, but the political damage has been done.

The opposition has several courses of action at its disposal, a few of which come to mind immediately. It can demand that the government produce information on all government inspections to see if they do not carry similar risks of cover-ups as the result of prior notice. It can demand that the government produce a complete list of former government officials employed by firms doing business with the government on minimum rice (or, if it wants to expand the playing field, businesses otherwise subject to government inspection). It can search for the names of any LDP Diet members receiving political contributions from Mikasa Foods. I am sure that Akira Nagatsuma and his colleagues are already looking into these and other ways to exploit the latest revelations to the DPJ’s advantage.

As for the latest Social Insurance Agency revelations regarding the falsification of premium payment records to cover up corporate delinquencies, this is yet another example of the systemic failure at the SIA. The extent of the fraud is unknown and is likely never to be made clear; there’s good news and bad for the government in this. The saving grace for the LDP is that the SIA has been so openly and thoroughly discredited that it takes a misdeed of massive proportions to excite the Japanese public.

So, as far as the government is concerned, one, the contaminated rice, is a case of guilt by association; the other, a case of institutional breakdown. Or so MAFF would like to claim. The success of the DPJ turns on its ability to weave these and other issues into a narrative that implicates the LDP in a systemic failure as the result of 53 years of political neglect. The latest policy manifest from DPJ appears to shaping up as everything that it promised in 2007, then some (dropping the gasoline tax surcharge and expanding agricultural subsidies to fishermen), still without raising taxes. This exposes its flank to attack not only from the LDP but also from the mainstream media. The DPJ must open a new front for attack; here, recent events seem to be giving government incompetence a new lease of life.

* Shochu is the Japanese term for a large family of distilled alcoholic beverages made from any one of wide variety of grain and tubers. Soju the Korean equivalent, appears to have much older origins. They both appear to belong to an Asia-wide family of powerful, often odiferous alcoholic beverages. And I know it’s powerful becaush right now I am writing dish footno… ah whadda…


ross said...

umm, long time since i have had shochu. a guy i used to know in kashiwa would keep a large glass jar filled with ume soaking in what i think was shochu. eating one felt like taking a shot. he'd eat 4 or 5 for breakfast.

Anyway, the DPJ can easily link this to the LDP if they try. They just need to hammer home the point that the LDP has long been the party of, by and for business interests over consumer interests. Examples abound, not least the near zero interest they earn on ordinary savings deposits.

Janne Morén said...

My original comment was half in jest; there is of course a large difference between knowingly inciting fraud and unwittingly giving another party the means to do so.

That said, even if the MAFF referral was not malevolent, there comes a point when so many mistakes, missteps, negligence and unintended consequences accumulate that it is the system as a whole, rather than specific individuals or agencies, that comes under suspicion. It starts to look like their very structure - the division of responsibilities, their culture, recruiting approach, training - makes these government agencies incapable of functioning as intended no matter how good the intentions of the individuals working there.

Fixing them becomes a bit like fixing an old British motorcycle. You can strip it down, go over every part, give it months of loving care. But what defeats you in the end is that, well, no matter how much you try it's still a British-made motorcycle. Failure is built right in ("failure is not an option" takes on a new meaning). An old Enfield or Ariel is of course charming enough to excuse almost any failure; the same can perhaps not be said for government agencies.

Ps. I like Shochu, especially shiso-flavoured. Overall I prefer herb vodka though.

Jun Okumura said...

I know, Janne. I just took the opportunity to give the issue a little more depth for visitors to my blog.

Good advice for the DPJ from both of you. Let's see if their people read the comments as well.

Are herbs the preferred additive to vodka? As Ross indicates, it is the umeboshi or pickled plum for shochu. I wonder if this is a common custom with distilled liquor the world over.

Janne Morén said...

Both spiced and neat vodka is pretty common, though neat vodka is often used in drinks while spiced is drunk as-is. There are berry-flavoured vodkas available, similar to the Gernam Obst, Umeshu and the like. But for some reason sweet or fruity flavours are nowhere near as popular in Sweden as the bitter herb-flavoured ones which are often based on wormwood, St. John's wort, elderberry or myrica. Salty, sour and bitter candy is very popular as well so it could just be a local cultural thing I guess.

I personally like Umeshu; we make it every year. But for vodka I much prefer something bitter or sour.

Jun Okumura said...

That's interesting. We Japanese use bitter flavoring in our food (and salty and sour are also okay), but not in our alcohol.