| Japan: Integrity Scorecard Report > Sub-Category: State-Owned Enterprises | ||
| Indicators | Score | |
| 64 | In law, is there an agency or equivalent mechanism overseeing state-owned companies? | 100 |
| 65 | Is the agency or equivalent mechanism overseeing state-owned companies effective? | 70 |
| 66 | Can citizens access the financial records of state-owned companies? | 60 |
Indicator and sub-Indicator Details
| 64 | In law, is there an agency or equivalent mechanism overseeing state-owned companies? | |||||||
| 64: In law, is there an agency or equivalent mechanism overseeing state-owned companies? | ||||||||
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Comments: There are also special corporations (in addition to Independent Administrative Institutions) funded by Fiscal Investment Loan Program (FLIP). After WWII, the Japanese Government established these special corporations in order to facilitate the recovery of Japan's economic infrastructure. The Ministry of Internal Affairs and Communication oversees the establishment, registration and abolishment of special corporations. Nevertheless, the objectives of special corporations are based on the jurisdictions of each ministry. Under the supervision of each ministry, these special corporations contribute towards their own objectives such as the reconstruction of roads, etc. Officially, ministries do not have any responsibility to manage their special corporations, but in practice, ministries post their high-ranked retired officials in upper-management positions. References: These are fundamental laws for state-owned corporations: Article 4, item 15 of the Act for Establishment of the Ministry of Internal Affairs and Communications (Act No.91 of 1999). Registration Order for Incorporated Administration Agency (Act No.28 of 1964). The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999).
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| 65 | Is the agency or equivalent mechanism overseeing state-owned companies effective? | |||||||
| 65a: In law, the agency or equivalent mechanism overseeing state-owned companies is protected from political interference. | ||||||||
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Comments: These agencies are vulnerable to political pressure. Since the special corporations are dependent on the objectives of government, they have no choice but to abide by the political intervention. References: These are the fundamental laws for state-owned corporations: Article 4, item 15 of the Act for Establishment of the Ministry of Internal Affairs and Communications (Act No.91 of 1999). Registration Order for Incorporated Administration Agency (Act No.28 of 1964). The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999). For recent academic research, the following book is very comprehensive: Susan Carpenter (2003). Special Corporations and the Bureaucracy: Why Japan can't reform. New York: Palgrave Macmillan.
Peer Review Comments: Not always; it's according to the situation.
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| 65b: In practice, the agency or equivalent mechanism overseeing state-owned companies has a professional, full-time staff. | ||||||||
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Comments: Most employees are recruited from the public. As usual, retired bureaucrats from ministries are re-employed as upper management in special corporations. Under the control of ministry, these ex-bureaucrats will operate these special corporations alongside the ministry's objectives. Generally speaking, these bureaucrats do not have work-related skills, but have general skills because of routine on the job training in their ministry. References: Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. Richard A. Colignon and Chikako Usui (2003). "Amakudari: The Hidden Fabric of Japan's Economy." New York: Cornell University Press. The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999).
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| 65c: In practice, the agency or equivalent mechanism overseeing state-owned companies receives regular funding. | ||||||||
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Comments: The government subsidizes each special corporation. Since the business of special corporations is not profitable (in most cases negative profit), most of the corporations face operational difficulties without proper funding. References: Media reports. Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999).
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| 65d: In practice, when necessary, the agency or equivalent mechanism overseeing state-owned companies independently initiates investigations. | ||||||||
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Comments: The jurisdiction ministry will investigate their controlled state-owned enterprises. Also Board of Audit of Japan is responsibility for checking their accounting balance. References: Media reports. Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999).
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| 65e: In practice, when necessary, the agency or equivalent mechanism overseeing state-owned companies imposes penalties on offenders. | ||||||||
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Comments: Since special corporations are under the jurisdiction of each ministry, they are vulnerable to the decision of the ministry. If the special corporations offend, the offenders are imposed penalties by the ministry. References: Media reports. Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. The Act on General Rules of Incorporated Administrative Agencies (Act No.103 of 1999).
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| 66 | Can citizens access the financial records of state-owned companies? | |||||||
| 66a: In law, citizens can access the financial records of state-owned companies. | ||||||||
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Comments: Based on the Law Concerning the Disclosure of Information Held by Independent Administrative Institutions, etc. (Law No.140 of 2001), Japanese citizens can request the information. But there are still difficulties in accessing the information, especially for foreign nationals since not all the information is translated. Some information can accessible by Internet (in Japanese Only) at [ LINK ]. References: Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform. "New York: Palgrave Macmillan. Law Concerning the Disclosure of Information Held by Independent Administrative Institutions, etc. (Law No.140 of 2001). [ LINK ] Ministry of Internal Affairs and Communications, "The Promotion of information disclosure for Independent Administrative institution" (in Japanese only). [ LINK ] Sakae Kitazawa (2001). Public Enterprise: the Hidden Sanctuary of Bureaucracy (Koueki Houzin: Kakusareta Kan no Seiiki). Tokyo Iwanami Syoten.
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| 66b: In practice, the financial records of state-owned companies are regularly updated. | ||||||||
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Comments: There are still some corporations that disclose their information to the public. Some of them can be accessed at: [ LINK ]. References: Media reports. Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. Law Concerning the Disclosure of Information Held by Independent Administrative Institutions, etc. (Law No.140 of 2001). [ LINK ] Ministry of Internal Affairs and Communications "The Promotion of information disclosure for Independent Administrative institution" (in Japanese only). [ LINK ] Sakae Kitazawa (2001). Public Enterprise: the Hidden Sanctuary of Bureaucracy (Koueki Houzin: Kakusareta Kan no Seiiki). Tokyo Iwanami Syoten.
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| 66c: In practice, the financial records of state-owned companies are audited according to international accounting standards. | ||||||||
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Comments: Most special corporations are not satisfied with the international standard of auditing because the supervision of these corporations is under the control of each ministry. Government subsidizes most of them, despite their huge deficits. In that sense, their account balance is very unclear to the public. References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. Sakae Kitazawa (2001). Public Enterprise: the Hidden Sanctuary of Bureaucracy (Koueki Houzin: Kakusareta Kan no Seiiki). Tokyo Iwanami Syoten.
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| 66d: In practice, citizens can access the financial records of state-owned companies within a reasonable time period. | ||||||||
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Comments: There are red-tape procedures to access the information. References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform. "New York: Palgrave Macmillan. Sakae Kitazawa (2001). "Public Enterprise: the Hidden Sanctuary of Bureaucracy" (Koueki Houzin: Kakusareta Kan no Seiiki). Tokyo Iwanami Syoten. Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Law Concerning the Disclosure of Information Held by Independent Administrative Institutions, etc. (Law No.140 of 2001).
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| 66e: In practice, citizens can access the financial records of state-owned companies at a reasonable cost. | ||||||||
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Comments: One can pay a reasonable cost to access the information, such as photocopying, visiting the place, etc. References: Media reports. Academic, policy or professional studies. Government studies. Susan Carpenter (2003). "Special Corporations and the Bureaucracy: Why Japan can't reform." New York: Palgrave Macmillan. Sakae Kitazawa (2001). Public Enterprise: the Hidden Sanctuary of Bureaucracy (Koueki Houzin: Kakusareta Kan no Seiiki). Tokyo Iwanami Syoten. Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Law Concerning the Disclosure of Information Held by Independent Administrative Institutions, etc. (Law No.140 of 2001).
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