June 8, 2020

Akahata editorial (excerpts)

Public criticism is growing over an allegation of corruption concerning a government subsidy program for business continuation of small- and medium-sized enterprises and the self-employed who were adversely affected by the coronavirus outbreak.

The Service Design Engineering Council, which was established mainly by Japan’s leading advertisement agency Dentsu, made with the Economy Ministry a contract to perform office work related to the subsidy program for a fee of 76.9 billion yen. The council then spent 74.9 billion yen to subcontract the work to Dentsu which farmed out the task to its subsidiaries and also to the tech firm transcosmos.inc and the staffing agency Pasona whose chairman, Takenaka Heizo, is known for having served as the Economic Revitalization Minister. Dentsu, Dentsu subsidiaries, and Pasona are all member of the Service Design Engineering Council.

The subsidy program in question is designed to provide financial support to SMEs and the self-employed who suffered a decrease in income due to the government request for business suspensions. It, however, is criticized as it takes a long time to receive the subsidy payment as applicants have to fulfill various requirements such as submitting documents showing the loss of earnings and bank account information. In addition, the Service Design Engineering Council, the prime contractor, was found to be tainted by the corruption allegation. This is a huge problem.

Opposition parties in Diet meetings urged the government to explain how it decided to award the contract to the dubious council but the government made no clear explanation. The opposition parties also alleged that the council’s subcontracting to Dentsu constitutes “hundred-percent subcontracting” prohibited in the Economy Ministry’s guidelines, only to receive vague responses from Economy Minister Kajiyama Hiroshi. In addition, Dentsu and other member companies of the council made political donations to the ruling Liberal Democratic Party. It is also reported that the council failed to release its financial reports for more than four years after its foundation.

The opposition parties pointed out that the government would not have needed to contract out the office work regarding the subsidy program if it decided to make use of the network of chambers of commerce and industry across the country. The Abe government and the Economy Ministry should publicly respond to the controversy.