TT-685 -- Bureaucrats -- Enough is Enough, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, Nov 04, 2012, Issue No. 685

+++ INDEX

- What's New -- Bureaucrats -- Enough is Enough
- News -- Missile-killing drone planned
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Osaka Seaweed Icecream, Akita Colors
- News Credits

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+++ WHAT'S NEW

Reading the newspapers over the last few weeks, one could
be forgiven for thinking that Japan is suffering a plague
of corruption and insider dealing, especially by its
bureaucrats -- the very people who are entrusted with
minding the public's interest. The situation is especially
depressing when one realizes that the rest of us are
hunkering down and preparing for huge increases in taxes.

Most of these revelations are well publicized, and so we
won't dwell on them, but put together they present a
picture of relentless selfishness and conniving to ensure
that the paper pushers and their friends are the recipients
of any legislation and dispersements made. Perhaps this is
the same the world over, but some of the worst examples are
so blatant that one wonders if Japan really is a first
world country.

Here we pick up four representative cases that have hit the
press in the last two months:
* 25% of the JPY12trn budget for Tohoku disaster relief was
misspent and only 25% has actually gone to the
reconstruction effort (50% still not allocated)
* 4 of the 6 experts forming the new Nuclear Regulation
Authority (NRA) panel are or have been in the payroll of
the nuclear industry
* The Board of Audit has found that government entities in
FY2011 misused JPY529.67bn, the second highest figure on
record
* 10 of a 15-person advisory council responsible for
recommending approvals of new universities and reporting to
Education Minister Makiko Tanaka are concurrently serving
at academic institutions -- a clear conflict of interest

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[...Article continues]

Tohoku funds misallocation.
The revelation of misappropriation of Tohoku disaster
relief funds is particularly troubling. We wonder how the
architects of an JPY800m appropriation to support whaling
or JPY30m to advertise the Tokyo SkyTree are able to sleep
at night while they know that 325,000 of the 340,000
evacuees in Tohoku are still either homeless or in
temporary housing? It's really sickening. As the scandal
has hit the media, the consensus has been that it's the
fault of an inexperienced, overwhelmed, and now undermanned
DPJ government. However, if we remember correctly, wasn't
it the opposition parties that insisted on watering down
the specificity of the Tohoku relief package, leading to
the current diversion of funds? Either way, the lack of
funds for Tohoku itself is shameful.

NRA panel stacking
Equally worrying is that our nuclear future is being
decided by "experts" financially connected to the very
nuclear power companies and agencies found so lacking in
the Fukushima disaster last year. Disclosures show that 4
of the 6 panelists have received funds of between JPY3m and
JPY27m from nuclear entities for research and other work.
Perhaps this isn't surprising, considering that there are
not that many jobs for nuclear experts in Japan that aren't
tied to the industry. But the fact remains that these
people have a clear conflict of interest, especially since
the decisions of the NRA could mean life or death in the
future.

For example, over the last few days, there has been a
kerfuffle over the discovery of an apparently active fault
directly under reactors 3 and 4 of Oi nuclear power
station. You'll recall that after all of Japan's nuclear
facilities were taken offline earlier this year, only Oi
was put back online again. Now it has emerged that Oi, like
other nuclear power stations was sited based on politics
rather than upon consideration of the geology. TEPCO's
humongous Kashiwazaki Kariwa plant is another egregious
example. The Oi fault has to be worrying for the quarter of
million Fukui City residents who are only 55km away.

So, will the Oi reactors, the only two in the country to be
operating, be turned off or not? This decision will be a
rather pivotal one that will possibly derail the
rehabilitation efforts of the nuclear industry if the
answer is to turn them off. Just WHO is in charge of
deciding? Why, the 6 gentlemen at the NRA, whose future
sources of funding will also be at stake. What do you think
they will decide?

Misappropriation of Government funds
Every year the Board of Audit, which was originally part of
the Ministry of Finance, but which is now semi-autonomous
and somewhat trustworthy, has run an audit on how
government funds are misused. This last week it issued a
report stating that it had uncovered 513 cases of misuse,
causing estimated losses of JPY529.67bn. This rather
staggering amount represents actual wastage, versus
politically suspect usage (such as the Tohoku money going
to fund road repairs in Okinawa -- which is at least
something useful).

Among the misuse of funds was a case of JPY93.6bn of
land held by the Urban Renaissance Agency and unsold for 7
years after originally purchasing it for various housing
projects. Then there was JPY74.3bn paid out by the Ministry
of Internal Affairs and Communications to the Management
Organization for Posting Savings and Postal Life Insurance,
but which was held as surplus (perhaps also read as
"slush") funds. Hmmm, even the name of the recipient sounds
suspicious.

The revelations have led to fingerpointing at the DPJ and
charges of ineptitude. Well, it is true that under the DPJ,
bureaucratic misspending has surged more than 100%,
suggesting that the situation is out of control. Recently
declared political candidate (ex-Tokyo Mayor) Shintaro
Ishihara is really making hay out of this.

What we can't understand, is why, if the problem for the
DPJ is that it is being overwhelmed and outflanked by the
bureaucrats working for it, the government doesn't just
simply pass legislation to make it illegal to misspend and
misappropriate more than a certain amount of money, with
jail time based on a formula? This would be a simple and
effective deterrent for a scheming group who otherwise
hate the glare of publicity.

Education Ministry council insiders
Lastly, we come to Makiko Tanaka, the daughter of 70's
strongman and former PM Kakuei Tanaka, who takes after her
dad personality-wise. In the last 10 years, Tanaka has made
a career out of fighting bureaucrats. Last time it was at
the foreign ministry, and she got fired for her efforts.
This time it's the Education Ministry. In the last couple
of days she has shaken the ministry to its core by refusing
to allow three new universities to be inaugurated next
year. She was apparently advised by ministry officials to
let the applications to go ahead, but Tanaka had her own
ideas and and said that she would not approve them, at
least until there is a review inside the ministry of what
it should do about the nation's other 800 struggling
institutions.

She is right, of course, that the education system is
chronically sick and just as Japan had to force mergers on
its banks 15 years ago, probably it needs to undertake the
same actions with the nation's universities now. Tanaka
tellingly said that out of the 15 members of the advisory
panel, 10 of them were serving academics, and so they are
highly unlikely to disappoint their colleagues with a
refusal, which is why the nation has had a 50% increase in
universities in the last 19 years, even as the student
population has fallen over the same period.

You would think that the media would begrudgingly admire
Tanaka for drawing a line in the sand and trying to root
out wasteful approvals. Instead, though, her
confrontational style has drawn huge criticism and she
will be lucky to last until the end of the year. Meanwhile,
the management teams behind the three applying universities
are bitterly disappointed, and now there is talk of a
lawsuit against the Ministry. An expert in public
litigation, Mr. Yasutaka Abe, said, "The council gave its
approval of the universities based on the Standards for
Establishment of Universities, guidelines that the
ministry created. Minister Tanaka's judgment runs counter
to the standards that her own ministry issued. It's not a
credible decision, as it's outside the realm of the
authority of an education minister."

Yup, he's right, the bureaucrats made the rules 20 years
ago, and because no one has had the guts to rip them up,
the building madness continues.

Do you see a recurring theme here? Status quo, lack of
strong, principled leaders, and money, are causing Japan a
lot more pain than she deserves. With a falling population
and loss of industry, times will be tough enough over the
next 10-20 years, without the extra hurdles of special
interest groups getting in the way. Instead, just like
Makiko Tanaka, the nation's top leadership needs to say
"enough is enough".

...The information janitors/

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+++ NEWS

- Bank phishing scams get worse
- Missile-killing drone planned
- UBS cuts 30 FI jobs in Tokyo
- Tokyo office rents really going up?
- Cash registers being replaced by smartphones

=> Bank phishing scams get worse

The Police have announced that for the first time two bank
customers of Mizuho were duped into giving account details
to a high-quality phishing site. The details were then used
to move the customers' money to other accounts and the
received cash withdrawn. Police said that a 53-year old
Japanese national in Aichi was arrested for
providing the account that the stolen funds were
transferred to. The suspect reckoned he gave his account
details to a Chinese friend who has since fled Japan.
***Ed: Stupid criminals? You have to wonder why the funds
weren't simply sent off-shore, rather than to a traceable
account in Japan?** (Source: TT commentary from
japantimes.co.jp, Nov 4, 2012)

http://www.japantimes.co.jp/text/nn20121104a9.html

=> Missile-killing drone planned

Those who think that Japan is on the path to rearmament
will see an announcement this week of a new missile-killing
drone as a major step forward in military hardware
development. The Defense Ministry will secure up to JPY3bn
to develop a drone that can stay airborne for long periods
and detect and shoot down missiles before they reach
Japanese territory. The development of the drone is being
defended as necessary because of the short detection time
available to Japan currently for missiles launched from
North Korea. The newly planned drones will detect a launch
immediately, rather than 10-15 minutes after the fact.
***Ed: Of course drones don't have to fly in/over Japan and
can easily be exported. This is proving to be a major
market globally and we expect that the Japanese will try to
corner the high-reliability, moderate-cost layer of the
sector. Will be interesting to see where they get their
software developed.** (Source: TT commentary from afp on
google.com, Oct 4, 2012)

http://bit.ly/VKThFb

=> UBS cuts 30 FI jobs in Tokyo

In just the latest round of relentless head cutting in
Tokyo by foreign banks, UBS has apparently cut 30
fixed-income (FI) jobs, including traders and sales staff,
because of a Headquarters plan to cut 10,000 jobs worldwide
as it shrinks its investment banking operations.
Bloomberg.com said that there may be more cuts in the
wings. ***Ed: UBS has been quite active on getting on top
of the currently depressed banking market, reducing its
head count from 868 to 768 people in the 12 months.
Although difficult for the employees involved, the trimming
has resulted in Tokyo moving from a JPY2.1bn loss in FY2010
to a JPY2.8bn profit for FY2011.** (Source: TT commentary
from bloomberg.com, Oct 31, 2012)

http://bloom.bg/UsD3Q7

=> Tokyo office rents really going up?

A Nikkei survey done in October has it that Tokyo's office
rents have jumped 10% in the last 12 months, based on
responses from real estate agents. According to the survey,
although overall demand remains weak, especially for older
buildings, the availability and demand for new buildings
is especially strong in places like Akasaka and Aoyama.
***Ed: The caveat with these surveys is that since there is
a glut of new office space coming on to the market, it's
only natural that most of the market movement has been to
fill the newer digs while they are available at lower
prices than ever before. However, the reality is that the
market is still as depressed as ever, and for every company
expanding, there are several more contracting. We see no
overall rent rise trend for older buildings, which make up
the bulk of the market inventory, for another couple of
years yet.** (Source: e.nikkei.co.jp, Nov 3, 2012)

http://e.nikkei.com/e/ac/tnks/Nni20121103D03JFF02.htm

=> Cash registers being replaced by smartphones

We first noticed a Japanese store using a US-based software
app and iPad about 12 months ago in Omotesando, but now the
Nikkei says that the trend is fast catching on with
mainstream store owners as well. POS software from Plugram
is apparently popular, while credit cards are read with
small devices attaching to a smartphone. Apparently a
smartphone setup costs around JPY200,000, including
installation, compared to JPY1m-JPY2m for a traditional
cash register. ***Ed: No indication of sales numbers yet,
but if this is a real trend, then it will hit Sharp and
other POS terminal makers hard.** (Source: TT commentary
from e.nikkei.com, Nov 2, 2012)

http://e.nikkei.com/e/ac/tnks/Nni20121102D02EE807.htm

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
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+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

=> No comments or corrections this week

***------------------------****-------------------------***

+++ TRAVEL DESTINATIONS PICKS

=> Kansou Seaweed Ice Cream, Osaka
Surprisingly delicious kelp ice cream!

Kombu Sofuto. Yes, kelp-ice-cream, you read that correctly.
One hot afternoon, after our stroll in Nakanoshima park, my
friend Kyoko said to me, “Let’s have some ice cream, Kombu
sofuto!” My first reaction was, “Kombu sofuto? You mean
kombu, the seaweed? Kelp?”

“Yes, yes, kelp soft-serve cream, it’s really good!!” Kyoko
was very persistent so I doubtfully followed her to Kansou
in Yodoyabashi.

After walking for about 15 minutes, we arrived at the shop.
Kansou was far from what I imagined. The shop is well
hidden on the first floor of the beautiful Yodoyabashi
Centre Building. Kansou has been specializing in kombu for
about two centuries. Kombu, being a vital ingredient in
Japanese cuisine, is used in stews and broths giving them
the delicious “umami” taste. We could see the shop from
inside the glass walls, easily recognized with the noren
(Japanese curtain) with the words Kansou.

http://japantourist.jp/view/kansou

=> Juniko Lakes, Akita
Crystal Clear Water in a Beautiful Forest

In 1704 a large earthquake in northern Akita (where
earthquakes are quite rare) was so powerful that it changed
part of the local geography in nearby Aomori prefecture.
Parts of mountains crumbled, the soil began to liquefy, and
streams and rivers realigned. Years later after Mother
Nature ran her course, the people that visited were able to
enjoy her beautiful creation of crystal clear lakes and
ponds. Specifically this area is located in Fukaura town at
the corner of the culturally significant Shirakami-sanchi
nature park. This tourist destination and natural treasure
is “Juniko” or “twelve lakes.”

Although the area is called “twelve lakes” there are
actually 33 lakes and ponds. It is said that from on top of
the nearby Mt. Okuzure you can see twelve lakes, the others
are obscured by Shirakami-sanchi’s mysterious and plentiful
trees. Lakes and ponds vary in size and depth; the
shallowest being just shy of two meters while giants like
“Oike” surpass 27 meters. All share the common trait of
having incredibly clear water. At several ponds you can
see all the way to the bottom. The rain and groundwater in
the area that keeps the lakes at a near constant level and
the water is naturally filtered by the area’s densely
packed beech trees.

http://japantourist.jp/view/juniko-lakes

***------------------------****-------------------------***

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+++ ABOUT US

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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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