The Rise of a Corporate Empire

In 1956, an unassuming 18-year-old named Hiroshi Ezoe achieved what many Japanese students only dreamed of: admission to the University of Tokyo, the nation’s most prestigious academic institution. Standing just 1.65 meters tall, Ezoe hardly stood out among his elite peers. Yet beneath his modest exterior lay an insatiable hunger for wealth and an entrepreneurial spirit that would eventually shake Japan’s political establishment to its core.

By his sophomore year, Ezoe had already demonstrated his business acumen. When the university’s student newspaper faced financial ruin, he took on the challenge of reviving it—securing advertising contracts from 12 companies within a single quarter. This early success foreshadowed his future. After graduating (albeit with a delayed year), Ezoe bypassed corporate employment entirely. In 1960, with a borrowed office and two employees, he launched University News Advertising Agency, a modest venture that would evolve into the Recruit Group—a corporate giant whose name would later become synonymous with Japan’s biggest postwar corruption scandal.

Japan’s Economic Miracle and Ethical Erosion

Ezoe’s ascent mirrored Japan’s postwar economic boom. From the late 1950s through the 1980s, Japan’s GDP grew at staggering rates, often exceeding 10% annually. Corporate profits soared, and Ezoe’s advertising business thrived. By 1970, Recruit’s annual revenue had surpassed ¥10 billion.

Yet Ezoe wanted more. In 1974, he diversified into real estate, founding Recruit Cosmos. By 1988, the subsidiary ranked as Japan’s second-largest property firm, trailing only Tokyo Real Estate. Success, however, came at a cost: deep entanglement with political power brokers.

Ezoe cultivated ties with influential figures like Nippon Telegraph and Telephone (NTT) Chairman Hisashi Shinto and former Prime Minister Yasuhiro Nakasone. These connections granted him appointments to government advisory roles—conveniently overlapping with his business interests. By the late 1980s, Recruit had grown into a sprawling conglomerate with 23 subsidiaries and 10,000 employees. But its rapid expansion concealed a corrosive secret: systemic bribery disguised as stock transactions.

The Scandal Unfolds: Stocks, Lies, and Investigative Journalism

The scandal erupted in 1988 when Asahi Shimbun exposed a simple yet devastating scheme: Recruit had gifted unlisted shares of its subsidiary, Recruit Cosmos, to bureaucrats and politicians at artificially low prices. When the shares went public, recipients reaped astronomical profits—no personal investment required.

The first domino fell with Kawasaki Deputy Mayor Iwasaki Koshio, who resigned after admitting to pocketing ¥120 million from Recruit stock. But the scandal’s true scale soon became apparent. Investigative journalists and opposition lawmakers uncovered a web of corruption ensnaring:
– Four cabinet ministers, including Finance Minister Kiichi Miyazawa (¥52 million profit).
– Prime Minister Noboru Takeshita, whose aides accepted ¥50 million in loans.
– 13 Diet members and dozens of bureaucrats across ministries.

The scheme exploited legal gray areas. While Japan lacked explicit laws against preferential stock sales, the brazenness of Recruit’s transactions—coupled with quid pro quo favors—made the corruption undeniable.

Media, Public Outrage, and Political Collapse

Public trust evaporated as revelations mounted. In a dramatic televised moment, opposition politician Yoshiro Nakayama exposed Recruit’s attempted bribery by releasing hidden-camera footage of a company executive offering him ¥5 million in cash. The backlash was immediate and severe:
1. Resignations: Miyazawa and Takeshita’s “clean cabinet” collapsed within days after new bribes surfaced.
2. Arrests: NTT’s Shinto and labor ministry officials were jailed for accepting stock and lavish perks.
3. Suicides: Takeshita’s secretary, Aoki Ihei, took his life amid the fallout.

By April 1989, Takeshita’s approval rating plummeted to 8%. His successor, Sosuke Uno, lasted just a month before a sex scandal forced him out. The Liberal Democratic Party (LDP), in power since 1955, suffered historic losses in the 1989 election. Though the LDP temporarily regained control, the scandal’s lingering stigma contributed to its 1993 ousting—ending 38 years of uninterrupted rule.

Legacy: A Watershed for Japanese Governance

The Recruit scandal’s aftermath reshaped Japan:
– Legal Reforms: Stricter political funding laws were enacted, though loopholes persisted.
– Cultural Shift: Public tolerance for elite impunity eroded, paving the way for later reforms.
– Economic Caution: The scandal coincided with Japan’s asset bubble collapse, amplifying calls for transparency.

Ironically, the scandal’s exposure underscored the strength of Japan’s free press and judiciary. Yet as Ezoe’s rise and fall demonstrated, systemic corruption often thrives in periods of unchecked growth—a cautionary tale for nations balancing prosperity with accountability.

In the end, the Recruit scandal wasn’t merely about one man’s greed. It revealed how easily ethical boundaries blur when money and power intertwine—and how swiftly public trust can vanish when the truth emerges.