JAPAN: Business, Entertainment Make a Corrupt Mix

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Apr 1 1998 (IPS) - Mama Saito (not her real name) is worried about the dramatic drop in business in her exclusive nightclub in the Ginza, Tokyo’s most expensive entertainment area, since last year.

“My clients were mostly middle managers who used my place for making business deals. But the economic recession plus the recent scandals involving entertainment industry has turned the tables on us,” says Mama Saito.

She is talking about the common practice of ‘settai’ in Japan’s corporate world, where clients, public officials and corporate executives are entertained lavishly to facilitate business discussions.

While widespread and long accepted, the custom has come under fire in the wake of a series of bribery scandals involving businesses and finance ministry bureaucrats, who were wined and dined at expensive restaurants and bars in exchange for sensitive nformation.

The scandals reached Japan’s central bank in March, with the arrest of Yasuyuki Yoshizawa, head of the Bank of Japan’s capital markets division. He is accused of accepting 33,000 U.S. dollars worth of entertainment in the past five years, in return for leaking sensitive information affecting interest rates.

“The practice of entertaining one’s clients in expensive surroundings is to lay the groundwork for negotiating and smoothing over possible future misunderstandings,” said Koji Iwatsuki, a company employee whose entertainment allowance runs into more than 46,000 dollars annually.

“A contract depends heavily on strength of ties cultivated through wining and dining,” he added.

“It is bribery, pure and simple,” argued Noboru Yamagichi, who runs a struggling English-language company and does not have the budget to keep up with corporate bigwigs.

“Businessmen may try to explain the practice as an essential part of work. But that doesn’t cover the disgraceful seeking of favors which is often given to the disadvantage of ordinary citizens,” he pointed out.

‘Settai’ does not come cheap for both government officials and private businessmen. The practice, which may include golf excursions and overseas travel, has developed into a huge business worth 41.6 billion dollars in 1996, according to the National Tax Administration.

In 1983, during the bubble economy’s years, the amount spent by companies on business-related entertainment reached 40 million dollars a day.

In Mama Saito’s members-only club, a Coke costs customers 10,000 yen or 77 dollars. A night of entertainment involving a bottle of whiskey, hors d’ouvre and the company of a few hostesses can leave the host with a tab of from 700 to 1,520 dollars, depending on the size of the group.

But for many companies, the chits their executives sign on such nights serve an important purpose. Under the thin veneer of laughter and drunken happiness, the evening, for both seller and buyer, is a lubricant for a business deal in the making.

‘Settai’ goes back hundreds of years, when business deals or policy negotiations among bureaucrats were conducted, not in offices or at a public debate, but in the closed, private confines of geisha houses after dark.

In the latest finance ministry scandal, Japanese media reported that ministry officials had a penchant for a men-only dining club, where the membership fee for companies reaches 30,000 dollars.

There, waitresses serve their customers ‘shabu shabu’, a popular delicacy of thinly-sliced beef. And for 50 dollars each, the club gives members torches with which to shine under the skirts of waitresses who do not wear underwear.

After complaints from the public, the club owner was charged with indecent practices. Similar practices, however, are not unusual at other establishments and have been part of Japan’s lucrative ‘pink world’ for decades.

“It’s the money,” Mama Saito says. She instructs the 50 girls who work for her to laugh at any joke made by customers, allow the men to touch them, and keep pouring them drinks.

“My girls are not prostitutes. They are there to boost the self-esteem of Japanese men, making it easier for them to talk about business deals,” she pointed out.

But women’s groups dismiss this, saying women work in such places because of their low status in society and a lack of real opportunities for high-paying careers in the corporate world.

Cheiko Akaiishi, editor at the feminist newspaper ‘Femine’, said: “The problem lies in the low status women have in patriarchal Japanese society, which uses Japanese women like tissue paper — to be used and thrown away at the whims of the user.”

American business writer Boyd De Menthe says ‘settai’ is not peculiar to Japan and is practiced in other countries as well.

“But what is particular about Japan is that entertainment budgets are so clearly installed as a way of doing business,” he explained. The construction industry alone allotted 1.17 trillion yen for entertaining and socialising in 1996.

The new chief of the Bank of Japan has promised to set up rules to curtail wining and dining of government officials by companies. The government is also looking to make it illegal for politicians to accept lavish entertainment or presents.

Doing away with such an ingrained custom will be difficult, but growing disgust may well be putting some brakes on the huge and often lurid entertainment industry in Japan.

The Nikkei, Japan’s largest financial daily, recently called for a new law, similar to that in other industrialised countries, laying down a code of ethics in business practices.

“It is a shame,” said lawyer Toshiaki Takashi, who leads many lawsuits against local governments to demand transparency in their budgets that set aside a huge chunk for entertainment.

“Public money is used for wining and dining by local government officials, who explain that this budget is an important part of work. Then the public is not told of how their tax money is being spent,” he added.