JAPANESE SUGAR SCANDALS

Taranaki Daily News, Volume LII, Issue 193, 18 September 1909, Page 1

JAPANESE SUGAR SCANDALS

. FORMATION OF THE COMPANY. The Tokio law courts early in July delivered judgment in a case which attracted unprecedented interest in Japan. Three years ago—that is to say, in the immediate sequel of the war with Russia —when a commercial boom was beginning to assert itself in Japan, several sugar refineries in that country com- , liint'cl to form the "Great Japan Sugar ! Company," with a capita] of £1,200,00'), | and a branch in Formosa. Up to that time tile Japanese market had been mainly supplied from Hongkong, where two i-efineries existed under the auspices of leading British firing. It was confidently believed, however, that this competition from abroad would ultimately be broken clown, and the Great Japan Company received a hearty welcome from the public. Its early record verified that forecast, for it paid dlv-i- I •dends of 64 per cent., 20 per cent., 17'/j I per cent., and 15 per cent, (twice) >i> , successive half-years between Ist July, IUOO, and 31st December, 1908. Nevertheless, handsome as these returns were, their steadily declining dimensions and the gradual spread of rumors never convincingly refuted—to the effect that the last two of the above dividends had been defrayed with monej' obtained b/ defrauding the Customs, caused such a loss of confidence that from the close c* 1007 to the autumn of 190S the company's £5 shares were never quoted higher than £7 10s. THE SMASH. Then a catastrophe occurred. A haiik which had granted large accommodation to the company fell into difficulties, aad the measures taken by its creditors 1 id to startling disclosures. The company was virtually bankrupt. It owed some £400,000 to the Customs; its other debt amounted to nearly the whole of its capital, and some of its directors were found to have been speculating largely witli its shares, crediting to thomselve* the results of profitable transactions ane debiting the unprofitable to the company. These revelations produced something like a panic. They suggested that other nominally flourishing companies also might be whited sepulchres, anil that the whole system of auditing accounts in Japan stood in need of drastic reform. The sharu market, which hid just begun to recover from the pa.iic following the post-bellum boom, fell again into a slough of despondency, and the air began to be filled with disquieting rumors. MEMBERS OF PARLIAMENT IMPLICATED. There was, moreover, a far more flagrant feature. It transpired that the dishonest directors had been tampering with members of the House of Representatives; and one morning the citizens of Tokio learned that several prominent politicians had been apprehended and their houses subjected to rigorous search by the police. Each succeeding day saw additions to the ranks of these suspects, until finally no fewer than twenty-four members and ex-members of the Lower House of the Diet were in custody. On two occasions the directors of the company had resorted to bribes. The first was in the '23 rd session (1900-07) of the Diet, in connection with a Government Bill (or encouraging the export of sugar by granting a rebate of the consumption tax. This measure passed by a large majority, and would probably have been adopted on its merits without recourse to corruption. The second w&6 in the 24th session (1007-08). At that time uiin and exposure stared the directors in the face, and they conceived the desperate expedient of inducing the Govern, ment lo create a State monopoly or sugar, as had been already done in ihe case of sake, salt, tobacco, and camphor. It does not appear that the authorities were unduly approached in connection with this scheme. The directors confined themselves to purchasing support in the Lower House. In every instance their corrupt' overtures seem to have been accepted, but although something like £l2,ooo—a very large sum in Japan —wan paid out, the proposal encouui.rred such- strong ollicial opposition that it never reached the stage of Parliamentary discussion. There was no exposure, however, until the failure of tile Fujimoto Bank in the autumn of IUOS brought the company's affairs under the THE POLICE TAKE A HAND-

Even then several months elapsed baJure the police stretched out their hau.l3 —so many months that impatient murmurs began to be audible in many quarters. But the delay proved to have been devoted to collecting evidence. In April the arrests began, and, following each other in quick succession, they ultimately numbered twenty-four members or ex-members of the Diet, as well as live directors of the company. Every political parly in the State was involved. It cannot be said, however, that the recriminated men were in any case political leaders of the first rank. They belonged r ather to the category of sectional heads, each with a following sufficient to make their combination formidable. Among them, however, was a iiia-a who had been at one time president of the American Board Mission's nourishing college in Kioto, and whose name up to the moment of his arrest, had stood for everything upright and honorable. This man together with three others made frank and full confession of their guilt, aiid it was expected that their penalty would be a short term of deferred imprisonment—in other words, that they would be S3nLenced but not actually piraished. THE RESULT OF THE TRIAL. The Judges, however, took a different view. Out of the twenty-four accused they acquitted one; condemned the rest to major imprisonment for terms varying from three to ten months; and deferred tlie execution of the sentence ra seven cases, but extended that indulgence to only one of the three men with whom the public had specially sympathised. All were ordered to refund the money received liv them, the amounts varying from £4O to .12000. As for the* directors, their trial is not yet concluded, It was very noticeable that a radically divergent view was taken by llle newspaper Press anil by the counicl returned for the defence. More than seventy 'barristers pleaded for the accused, and almost without exception their appeals were founded on the proportionately greater disgrace and pain ', suffered by persons enjoying high social positions 'when the criminal laws weiC enforced against them. The newspapers, on the contrary, contended that such persons should he punished with ' additional severity, since their crime ' was aggravated by indifference to their duty as moral examples. Fortunately, the' Court took the latter view. 'THE PUBLIC STAXDPOIXT.

It joes without saying that this incident has given a severe shuck to puhlie respect for the Lower House of the Diet and to public confidence in the integrity of Japanese business outerprise. The latter feeling is likely to he short-lived, especially as a probably outcome o! the affair will In- the organisation of a Avetcm of chartered accountjants. But the reputation of the House of Representatives is effectually smirched, aud there will certainly accrue a marked increase of credit to Conservative politicians who oppose party Cabinets and to the House of Veers as an incorruptible guardian of national interests. From no point of view d.ies any material extenuation of the disgrace present itself, except, perhaps, from the historical fact that victory In war generally exercises a demoralising inlluenrv. liven that excuse, however, requires us to assume that these *vil practices were limited to post-bellum days—an inference not supported by the evident facility with which the various transactions were consummated, or by the recollection that talk of Parliamentary dishonesty has been heard in Japan for the past 'fifteen years. Discovery might probably have come long ago had circumstances conspired to facilitate it.