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RUCNDT/USMISSION USUN NEW YORK 8550

UNCLAS SECTION 01 OF 07 TOKYO 000464 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST 
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS 
OFFICE; SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY 
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 01/27/06 
 
 
INDEX: 
 
(1)  Why Shariki? Locals voice complaints about US military radar 
deployment plan 
 
(2)  Muroran will hold no welcome ceremony for US warships; US 
Navy rejects city's request to put off port call; Yokosuka murder 
causes citizens to feel uneasy 
 
(3)  Unexpected re-examination of Koizumi-style politics: 
Linkages of selection of candidates for last fall's Lower House 
election to Livedoor scandal, deregulation to earthquake- 
resistance data falsification scam, and Japan-US relations to 
discovery of risk material in US beef shipment 
 
(4)  Prime Minister Koizumi, making about-turn, says, "I bear 
responsibility" for supporting ex-Livedoor President Horie in 
last fall's election 
 
(5)  Government set to strengthen function of "market watchdog," 
reflecting on Livedoor stock scam 
 
ARTICLES: 
 
(1)  Why Shariki? Locals voice complaints about US military radar 
deployment plan 
 
Too Nippo (Page 1) (Full) 
January 25, 2006 
 
Japan and the United States are planning to install an early 
warning X-band radar system at the Air Self-Defense Force's 
Shariki Detachment base in the (Aomori prefectural) city of 
Tsugaru in order to defend the US mainland. In this regard, the 
 
SIPDIS 
government yesterday held a briefing of local communities at the 
Shariki Farmers Training Center. In the briefing, local residents 
voiced their anxieties to briefing officials from the government, 
with one local resident asking, "Why Shariki?" Another said, 
"Won't the radiowaves affect our daily lives?" In response to 
these questions, the government briefers only explained that the 
US military's personnel deployment to the radar site would be on 
a "small scale." The briefing resulted in leaving the locals 
dissatisfied. 
 
This was the first time for local residents to have received a 
briefing directly from government officials. About 124 residents 
crowded into the center, where they listened attentively to the 
briefing from the Defense Facilities Administration Agency's 
Sendai Defense Facilities Administration Bureau Facilities 
Department Director General Shigeru Harada and ASDF Lt. Col. 
Takuya Saito from the Defense Agency's Defense Policy Division. 
 
In the briefing, local residents raised a number of questions, 
such as: "Can you definitely say there will be no radiowave 
impact?" and "What if our farm products are affected by harmful 
rumors about them?" In addition, there was also a question asking 
if the government will give up on the planned radar deployment if 
the local communities raised an objection. 
 
In his explanation, Lt. Col. Saito outlined the X-band radar 
system and repeatedly underscored its safety. Asked about a 
possible spread of harmful rumors, he took the position that the 
government would like to repeat its explanations so that there 
 
TOKYO 00000464  002 OF 007 
 
 
would be no damage caused. 
 
Saito also said the government would give "sincere explanations" 
to the local communities and would like to push for the planned 
radar deployment with local understanding. With this, he strongly 
implied that the briefing was premised on deployment. 
 
Asked about the scale of the US military's planned personnel 
deployment, the government briefers reiterated "small-scale" 
deployment. There was no progress in the government's explanation 
given to the city in December last year. 
 
After the briefing, a 67-year-old man voiced his dissatisfaction, 
saying: "I don't know why they still can't tell us even now how 
many will come. I wonder if they have really inquired about this 
to US forces." Another man of the same age also said: "The 
government only says it's safe. With that alone, we don't know 
anything about the (radar deployment) plan." He added: "The 
government should give even more detailed explanations. 
Otherwise, we can't agree." 
 
(2)  Muroran will hold no welcome ceremony for US warships; US 
Navy rejects city's request to put off port call; Yokosuka murder 
causes citizens to feel uneasy 
 
MAINICHI (Hokkaido edition) (Page 22) (Full) 
January 27, 2006 
 
Two US naval vessels belonging to the 7th Fleet will enter the 
port of Muroran next month for a "goodwill and friendship" call. 
Meanwhile, the US Naval Forces Japan (USNFJ), headquartered in 
Yokosuka City, Kanagawa Prefecture, and Muroran City is squaring 
off over the planned port call. Just recently, a Yokosuka-based 
US sailor on board a 7th Fleet vessel was arrested for murdering 
a woman in Yokosuka. The Muroran municipal government asked USNFJ 
headquarters to call off the planned visit out of consideration 
for the anxieties of the local residents. However, Navy forces 
headquarters rejected the request. The city government will not 
hold a customary welcoming ceremony for the two US warships. A 
visit for friendship is turning into an emotional confrontation. 
 
The two incoming US warships are the USS Chancellorsville, a 
10,000-ton guided missile cruiser with a crew of about 300, and 
the USS Blue Ridge, a 19,200-ton flagship with a crew of about 
¶850. The Chancellorsville will be berthed at Sakimori Dock at 
Sakimoricho in Muroran City on Feb. 3-7, and the Blue Ridge on 
Feb. 6-10. The last time two US naval vessels were berthed 
together in port was 20 years ago, according to records taken 
since 1960. The port call scheduled this time will be the third 
case of tandem berthing. 
 
The Muroran municipal government cannot refuse their planned 
entry into port under the Japan-US Status of Forces Agreement. 
However, on Jan. 19, when the municipal government was informed 
of the planned visit, General Affairs Division Director Yoshiaki 
Toyoshima and other municipal government officials went to the US 
consulate general in Sapporo and requested the planned visit be 
put off, recounting that there is a residue of anxieties among 
citizens. The municipal government continued thereafter to 
negotiate over the telephone for a week. However, the US side 
made no concessions, maintaining that the two US naval vessels 
want to visit the city. 
 
 
TOKYO 00000464  003 OF 007 
 
 
"I don't think this is an appropriate time to visit," Muroran 
Mayor Masashi Shingu commented in an apparent expression of 
displeasure. The mayor and the Hokkaido government will request 
the US consulate general early next week that the safety of 
citizens be ensured. The Blue Ridge's captain will host a 
reception, but no municipal government officials will attend it. 
The municipal government will not cooperate in scenesetting for 
crewmen and citizens, they say. 
 
(3)  Unexpected re-examination of Koizumi-style politics: 
Linkages of selection of candidates for last fall's Lower House 
election to Livedoor scandal, deregulation to earthquake- 
resistance data falsification scam, and Japan-US relations to 
discovery of risk material in US beef shipment 
 
ASAHI (Page 2) (Excerpts) 
January 26, 2006 
 
The Livedoor scandal and the earthquake-proof data falsification 
scam have exposed the downside of Prime Minister Junichiro 
Koizumi's reform drive. Debate between the ruling and opposition 
camps that started today in the Budget Committee of the House of 
Representatives will become an opportunity to reexamine five 
years of domestic politics and foreign policy under the Koizumi 
administration. US beef also will be among the issues taken up in 
the Diet. How much will Minshuto (Democratic Party of Japan) be 
able to take advantage of these issues in its drive to assume the 
reins of government? The competence of the largest opposition 
party will now be tested. 
 
All opposition parties continued to grill Koizumi on the Livedoor 
scandal at yesterdays Diet session. Koizumi told reporters on 
Jan. 24: "I don't mind taking responsibility if I have to" for 
having supported Takafumi Horie, former Livedoor president. 
 
At a full session of the House of Councillors yesterday, however, 
Koizumi reiterated his stock reply, "The (arrest of Horie and the 
LDP's campaign support for him) are separate matters." Since last 
year's Lower House election has given him renewed influence over 
his party, Koizumi could not hide his displeasure at the 
opposition's attack. 
 
The opposition camp in criticizing Koizumi's politics has linked 
the earthquake-proof data falsification to the Prime Minister's 
deregulation policy, and the US beef issue to Koizumi's close 
ties with President George W. Bush. The LDP is desperately trying 
to defend itself from such attacks. 
 
At a meeting with deputy secretaries general of the party 
yesterday, Secretary General Tsutomu Takebe, who has now come 
under fire for his role in LDP backing of Horie, declared that he 
would stage counterattacks on Minshuto: "When the Diet opens, the 
political situation moves. Some always watch for the chance to 
shake the government. Attack is the best form of defense." 
 
One participant, perhaps sharing the pain with Minshuto, cited 
the violation of the stimulants control law by a former Minshuto 
lawmaker and the violation of the barristers law by another 
Minshuto lawmaker, Lower House member Shingo Nishimura. He said: 
"In Minshuto, one member made money by abusing his lawyer's 
license and another took drugs. These violations are more 
terrible than ours, aren't they?" 
 
 
TOKYO 00000464  004 OF 007 
 
 
The LDP intends to fend off the opposition's questioning of its 
relationship with Horie by making three assertions: 1) the party 
did not give endorse him and Minshuto, too, was in contact with 
him; 2) Secretary General Takebe personally backed him; and 3) 
Minshuto candidates broke the law. 
 
However, Internal Affairs and Communications Minister Heizo 
Takenaka, who also gave a campaign speech for Horie, said at a 
press briefing on Jan. 24, "I was asked by the party (to deliver 
a speech for him)." It is uncertain whether the LDP will be able 
to ward off the opposition's criticism as expected. 
 
(4)  Prime Minister Koizumi, making about-turn, says, "I bear 
responsibility" for supporting ex-Livedoor President Horie in 
last fall's election 
 
ASAHI (Page 4) (Excerpts) 
January 27, 2006 
 
At a House of Representatives Budget Committee session, Prime 
Minister Junichiro Koizumi was questioned about his view on his 
Liberal Democratic Party's (LDP) support in last year's House of 
Representatives election of independent candidate Takafumi Horie, 
former president of Livedoor Co., who has been arrested on 
suspicion of violating the securities law. Koizumi responded: "I 
will humbly bear responsibility if I have to do so." It was the 
first time for the prime minister to admit in the Diet the 
party's moral responsibility in connection with campaign support 
for Horie. He totally denied, however, his administration's 
responsibility for the earthquake-proof data falsification scam 
and the US beef issue, taking a stance to never allow attacks on 
his structural reform drive. 
 
Asked after the committee meeting by reporters about whether he 
would take responsibility for campaign support for Horie, Koizumi 
said: "Since I have been criticized, I will tolerate the 
criticism, even though the LDP never made him out as a reform 
symbol." He said three times: "I will take responsibility with 
resignation." He also spoke for Takebe who has been come under 
fire for having called Horie his "son," arguing, "They talked 
about it jokingly." 
 
At the Budget Committee session, Internal Affairs and 
Communications Minister Heizo Takenaka, who also stumped for 
Horie stated: "Since (Horie) had made it clear he supported the 
postal-privatization legislation, I went (to Hiroshima) to 
deliver a speech for him. I should be ashamed of failing to see 
through (his wrongdoings) at the time." 
 
Koizumi and Takenaka appear to have judged that it would be 
better for their party to preempt attacks by the opposition camp, 
which has repeatedly said that the LDP bears a moral 
responsibility. 
 
Koizumi did not forget to add: "I don't think this kind of 
problem occurred because of the Koizumi reform drive." 
 
US responsible for another ban on beef imports 
 
Prime Minister Koizumi has characterized the ongoing Diet session 
as a session to finish his structural reform initiative. He aims 
to make sure his successor takes over his reform drive. Koizumi's 
Diet replies on the US beef and earthquake-proof data 
 
TOKYO 00000464  005 OF 007 
 
 
falsification indicate his thinking that accepting criticism of 
issues directly affecting the government would substantially 
undermine his strategy. 
 
Koizumi was annoyed with Komei Matsumoto, policy chief of 
Minshuto (Democratic Party of Japan), who questioned the 
responsibility of the government for having decided in December 
to resume US beef imports. He argued: "You shouldn't blame me too 
much. The United States should be blamed. I don't understand why 
Japan has to bear the blame." 
 
Koizumi also underlined: "The Japanese government made the 
appropriate decision based on the results of the Food Safety 
Commission." He then read out the commission's report. 
 
It was apparent that he was irritated with questions about the 
quake-resistance data falsification scam and the US beef issue, 
although he responded in a straightforward manner to questions 
about the Livedoor scandal. 
 
Sumio Mabuchi, a Minshuto Lower House member, questioned Koizumi 
about the government's responsibility for failing to get on top 
of the earthquake-proof data falsification issue. Koizumi 
replied, "I understand that there remain unclear elements." 
 
Japanese Communist Party Diet Affairs Committee Chairman Keiji 
Kokuta questioned: "Don't you think the architectural fabrication 
case shows the negative effect of the competitive market policy 
which lets private companies authorize building construction?" 
Koizumi was quick to respond, "I cannot agree with your view." He 
appeared to be have determined not to make replies that would 
lead to shackling his reform drive. 
 
(5)  Government set to strengthen function of "market watchdog," 
reflecting on Livedoor stock scam 
 
MAINICHI (Page 3) (Slightly abridged) 
January 27, 2007 
 
In the wake of the violation by Livedoor Co. of the Securities 
and Exchange Law, the government and the ruling parties have 
begun to move to significantly strengthen the nation's market- 
monitoring system. The Securities and Exchange Surveillance 
Commission (SESC) failed to detect the schemes crafted by former 
Livedoor President Takafumi Horie, which even resulted in 
paralyzing the Tokyo Stock Exchange. The presence of the SESC as 
the market watchdog is now being called into question. The US has 
drastically strengthened its market-monitoring system and 
tightened penalties on illegal activities in the wake of the 
incident of deceptive accounting (by Enron Corporation) in 2001. 
 
"Is there a problem with the nation's market-monitoring 
function?" "Even if a set of rules are drawn up, it will be 
meaningless if the market watchdog is not functioning properly." 
In a meeting held on Jan.25 by the Committee on Corporate 
Governance of the Liberal Democratic Party (LDP), many 
participants posed doubts about the function and mechanism of the 
SESC. 
 
The SESC was established in 1992 as an independent organ from the 
former Finance Ministry, as an effort to implement administrative 
review ex post facto based on more transparent new market rules. 
This move was in response to a series of stock trading 
 
TOKYO 00000464  006 OF 007 
 
 
illegalities starting in 1992 in the aftermath of the bursting of 
the bubble economy. The SESC has been in charge of monitoring and 
investigating illegal operations in the market, as well as of 
examining securities firms. The surveillance panel, granted with 
investigation and accusation rights, logged 74 cases by June 
2005, including the case of the violation of the Securities and 
Exchange Law by Seibu Railway Co. 
 
The US Securities Exchange Commission (SEC) has been responsible 
for investigating illegalities linked to the securities market, 
determining administrative punishment, and planning rules. 
Japan's SESC, however, is not allowed to play the latter two 
roles. In addition, the commission is not an independent body but 
an affiliate of the Financial Services Agency (FSA), so it 
remains unable to completely ignore the government's influence. 
Some observers have doubts about the SESC's independence as a 
"market watchdog." 
 
An LDP lawmaker suggested: "The SESC should be made more 
independent, and the rights held by the FSA related to 
administrative punishment and rule planning should be integrated 
into the SESC." Even so, the proposed separation of only the 
securities section also has a negative side, because transactions 
cutting across banks, insurers, and securities firms are 
remarkably increasing recently as a result of methods of 
operating assets becoming more sophisticated. Based on the view 
that "there is no need to change the current mechanisms," FSA 
Director General Hirofumi Gomi said: "Should (the FSA and the 
SESC) remain independent and organically join hands with each 
other, that will be the most effective way." As it stands, there 
are pros and cons on the idea of transferring some functions of 
the FSA into the SESC. 
 
The shared view in the government and the ruling parties is: "It 
is indispensable to increase the number of officials engaged in 
monitoring the market." Currently, there are about 670 officials 
assigned in the market-related sections at the SESC and the FSA. 
This figure is less than one-fifth of the about 3,900 members in 
the SEC of the US. 
 
In the two organizations, there are only about 60 officials in 
charge of checking to find falsified information disclosed by 
listed firms, as was pointed out in the Livedoor stock scam. They 
are also required to engage in systemic planning. In a meeting of 
the House of Representatives Budget Committee yesterday, State 
Minister in Charge of Financial, Economic and Fiscal Policy Kaoru 
Yosano stressed the need to increase the number of the SESC. 
 
Calls for strengthening punitive regulations against financial 
crimes are growing in the LDP and business circles. In Japan, in 
the case of misstatements in an asset securities report, the 
relevant law stipulates that the offender is to be sentenced to 
up to five years imprisonment or fined up to 5 million yen. In 
the US, violators face a maximum of 25 years imprisonment. The 
Justice Ministry reportedly is negative about toughening the 
penalty in order to keep a balance with other penalties. But 
crimes in the capital market could shake capitalism from its very 
foundation. Given this, calls for heavier punishment are likely 
to grow. 
 
In the US in 2001 and 2002, large-scale accounting frauds 
destabilized its capital market. Set off by such incidents, 
Washington significantly strengthened penalties on business 
 
TOKYO 00000464  007 OF 007 
 
 
operators who conducted illegal activities and tightened the 
corporate-governance monitoring system. In the US, far more 
inspectors have been installed than in Japan. The US has thus 
established satisfactory systems to apply the brakes to "reckless 
moves" by business operators. 
 
The Livedoor scandal is similar in nature to a case of involving 
Enron Corporation, a leading US energy company, and the widow- 
dressing case involving WorldCom. All the three companies grew 
rapidly by illegally boosting their stocks through repeated 
corporate acquisitions. Like former Livedoor President Takafumi 
Horie, former WorldCom CEO Ebbers had been regarded as a "hero of 
the times," and former Enron CEO Lay had also establish personnel 
ties with some politicians. 
 
The two scandals involving the two leading companies in the US 
largely sent down stock prices. The US government and the US 
Congress, pressed hard to map out effective preventive measures, 
enacted the Corporate Accounting Reform Law late in July 2002, 
just after WorldCom's bankruptcy. 
 
The law obligates business managers to write signatures on their 
financial statements to guarantee the correctness of the contents 
entered in them. Under the law, the maximum 
 
imprisonment period was prolonged from five years to 20 years. A 
new charge against securities frauds, like insider transactions 
and share-price manipulations by business operators, was also 
created. In this case, offenders will be sentenced up to 25 years 
imprisonment. Ebbers was sentenced by the US Justice Department 
the prison term of 25 years last summer. 
 
The US government has also launched an effort to tighten the SEC 
functions still further. Setting aside approximately 780 million 
dollars (about 90 billion yen) as a special account in the budget 
for fiscal 2003, Washington increased 200 more members for the 
SEC to about 3,900 at present. 
 
The US market has calmly responded to the Livedoor incident, an 
analyst remarking: "The US has already taken necessary measures." 
New York stocks rose on Jan. 23-24, just after Horie was 
arrested. 
 
SCHIEFFER