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UNCLAS SECTION 01 OF 08 TOKYO 004931 
 
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: JAPANESE MORNING PRESS HIGHLIGHTS 10/23/07 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
Moriya scandal: 
4) Former Vice Defense Minister Moriya to be summoned as Diet 
witness in probe of his relationship with defense contractor, now 
under investigation (Asahi) 
5) US affiliate of Yamada Yoko Corp. also being probed in defense 
procurement scandal (Yomiuri) 
6) Defense Minister concerned that defense procurement scandal will 
sideline procurement of next generation CX engine (Yomiuri) 
7) Yamada Yoko Corp. gave Democratic Party of Japan (DPJ) President 
Ozawa political contribution of 6 million yen (Yomiuri) 
 
MSDF fueling mission: 
8) Vice Minister Yachi to visit Washington, meet Deputy Secretary 
Negroponte on defense and foreign affairs issues (Mainichi) 
9) Defense minister promises to put out a final report on missing 
MSDF records later this month (Yomiuri) 
10) Exchange in the Diet on the MSDF's missing records, etc. 
(Yomiuri) 
11) Prime Minister Fukuda, when he was chief cabinet secretary was 
aware of the mistake in MSDF refueling record prior to his meeting 
with the press (Asahi) 
12) "The series of scandals involving the Defense Ministry are 
regrettable," says prime minister, considering their possible impact 
on new antiterror legislation (Yomiuri) 
13) Japan still top ODA donor among the G-7 (Yomiuri) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi and Sankei: 
Former Vice-Defense Minister Moriya to testify before Diet 
 
Mainichi: 
Blood product maker knows 197 names of hepatitis C patients 
 
Yomiuri: 
Prosecutors investigate US subsidy of Yamada Yoko Corp. over 
unspecified expenditures 
 
Nikkei: 
Hitachi to exit pc production due to stiff competition 
 
Tokyo Shimbun: 
Legionella bacterium detected in condo spa in Adachi 
 
Akahata: 
Secretary General Ichida announces 24 Lower House proportional 
 
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representation candidates 
 
2) EDITORIALS 
 
Asahi: 
(1) Concealment of data a violation of civilian control 
(2) MHLW too sloppy regarding hepatitis C 
 
 
TOKYO 00004931  002 OF 008 
 
 
Mainichi: 
(1) MHLW never learns lesson about people suffering from hepatitis C 
induced from contaminated blood products 
(2) China unveils new leadership 
 
Yomiuri: 
(1) MHLW repeating "AIDS folly" 
(2) New Chinese leadership 
 
Nikkei: 
(1) Political reform essential for sustainable Chinese growth 
 
Sankei: 
(1) Suspicions about former Vice-Defense Minister Moriya must be 
cleared up swiftly 
(2) New Chinese leadership 
 
Tokyo Shimbun: 
(1) Civilian control ignored by oil concealment 
(2) AIDS lesson not applied to hepatitis C case 
 
Akahata: 
(1) Defense collusive ties must be probed thoroughly 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, October 22 
 
NIKKEI (Page 2) (Full) 
October 23, 2007 
 
08:49 
Met Japan-Australia Economic Committee Chairman Takashi Imai at the 
Imperial Hotel. Attended a joint meeting. 
 
10:21 
Met Japan Federation of Commercial Broadcast Workers' Unions 
Chairman Hirose and Vice Chairman Mabe. Followed by Finance Minister 
Nukaga and others. 
 
11:35 
Met Vice Health, Labor and Welfare Minister Edogawa. 
 
12:53 
Met Chief Cabinet Secretary Machimura. 
 
13:55 
Vice Education Minister Zeniya. 
 
15:06 
Met Indonesia Local Representatives Conference Chairman Ginanjar. 
Later met Vice Foreign Minister Yachi. 
 
16:17 
Met Special Advisor Yamatani. 
 
17:02 
Attended a party executive meeting in the Diet building. 
 
17:31 
Attended a meeting by the government and the ruling coalition on 
social security and tax reform at the Kantei. 
 
TOKYO 00004931  003 OF 008 
 
 
 
18:11 
Attended a meeting of cabinet ministers responsible for monthly 
economic reports. 
 
19:11 
Met Research Commission on Foreign Affairs Chairman Yamasaki. 
 
20:05 
Met his secretaries at the Grand Prince Hotel Akasaka. 
 
21:36 
Returned to his private residence in Nozawa. 
 
4) Ruling camp accepts demand for summoning Vice Defense Minister 
Moriya to Diet as sworn witness 
 
ASAHI (Top Play) (Excerpts0 
October 23, 2007 
 
The Liberal Democratic Party and the New Komeito decided yesterday 
to agree to a demand by the opposition camp to summon former Vice 
Defense Minister Takemasa Moriya to appear before the Diet as a 
sworn witness to question him over allegations that he had been 
receiving favors from a former executive of Yamada Yoko Corp., a 
trading firm specializing in defense and aircraft equipment. Now 
that Moriya has admitted he had been treated to free golf in 
violation of the Self-Defense Forces' code of ethics, the coalition 
judged it unavoidable to respond to the opposition camp's demand. 
The ruling coalition conveyed the decision to the Democratic Party 
of Japan (DPJ) and other opposition parties. Though both camps have 
yet to agree on a date, Moriya is likely to be summoned early next 
week. 
 
The government will hold a question and answer session at a House of 
Representatives plenary meeting today on a bill to extend the 
Maritime Self-Defense Force's refueling mission in the Indian Ocean. 
Executive members of the Lower House special antiterrorism committee 
from the ruling and opposition parties met yesterday afternoon to 
set a schedule for deliberations after the plenary session. The 
opposition camp made it a condition for starting deliberations at 
the committee to summon Moriya and other key figures to the Diet as 
sworn witnesses. The ruling coalition proposed last night that both 
sides should hold sessions on Oct. 24-25 and then determine a 
specific date and methods for summons after the session on Oct. 25. 
But DPJ committee head Yoshio Hachiro claimed: "Moriya and others 
should be summoned before the deliberations." Both sides failed to 
agree on a date. 
 
5) Prosecutors probe Yamada Corp.'s US office 
 
YOMIURI (Top play) (Abridged) 
October 23, 2007 
 
The Tokyo District Public Prosecutors Office has asked US judiciary 
authorities for investigative cooperation in order to probe a 
US-based subsidiary of Yamada Corporation, sources have revealed. 
Its task force sent prosecutors to the United States early this 
month, suspecting the subsidiary's deceptive accounting, the sources 
said. Yamada Corporation, headquartered in Tokyo's Minato-ku, is a 
trading firm in the aeronautic and defense area. The trading house 
has been closely tied to Takemasa Moriya, 63, formerly an 
 
TOKYO 00004931  004 OF 008 
 
 
administrative vice minister at the Defense Ministry, and this fact 
is seen as a problem. The task force has now already questioned 
executives at Yamada Corporation, as well as those at another 
trading company that was established by a 69-year-old former 
managing director of Yamada Corporation. The task force is believed 
to be looking carefully into the flow of murky money involving the 
two trading companies. 
 
When Moriya was in the post of administrative vice defense minister, 
a former managing director of Yamada Corporation frequently 
marshaled him into customer golf. This former executive also used to 
dine and wine Moriya after playing golf. 
 
Yamada International Corporation (YIC), a US-based affiliate of 
Yamada Corporation, is now suspected of having practiced deceptive 
accounting. YIC locates its US head office in Washington, branching 
out in New York and Los Angeles. Its former president, 70, is said 
to be close to the former managing director. In June last year, the 
former managing director retired from Yamada Corporation. After 
that, the former YIC president also retired and became a 
representative director of Nihon Mirise USA Inc., the Los 
Angeles-based US main office of Nihon Mirise Corporation (NMC), a 
trading house founded by the former managing director and 
headquartered in Tokyo's Minato-ku. 
 
According to Yamada Corp. sources, YIC scraped up off-the-book 
money-adding up to several hundred million yen-with deceptive 
accounting practices. "Yamada International is strongly suspected of 
having used some of the money to entertain the former Defense 
Agency's senior officials on official trips to the United States and 
US defense-related business executives," one of the sources said. 
The source also said that YIC has pooled the money. However, about 
100 million yen out of the pooled money has been lost since the 
former president went to NMC, according to the source. 
 
6) Concern over impact of scandal involving former Administrative 
Vice Defense Minister Moriya on CX engine, though some predict only 
limited impact 
 
YOMIURI (Page 4) (Full) 
October 23, 2007 
 
Following the revelation that former Administrative Vice Defense 
Minister Takemasa Moriya had improper relations with a trading 
company specializing in the defense area, voices concerning a 
possible impact of the incident on the Air Self-Defense Force 
introducing the next-generation transport aircraft codenamed CX. The 
CX, successor aircraft to C1 transport planes, is now being 
developed domestically. The development, which started in fiscal 
2001, is expected to be completed in fiscal 2011. Regarding the 
procurement of engines for CX transport aircraft, it was decided in 
August 2003 to procure engines produced by General Electric Co. 
(GE). The Defense Ministry purchased five engines for a development 
purpose from Yamada Corp. specializing in defense equipment, which 
has an agency contract with GE. 
 
However, a former senior managing director of Yamada Corp. who had 
treated Moriya to free rounds of golf, and wining and dining, 
established his own company Nihon Mirise Corp. (NMC). GE later 
changed its agency in Japan from Yamada Corp. to NMC. Since then, 
friction has been continuing between the two companies with Yamada 
Corp. filing a suit against NMC and the former senior managing 
 
TOKYO 00004931  005 OF 008 
 
 
director, asking for compensation. 
 
The Defense Ministry plans to procure another engine for a CX 
transport aircraft for a development purpose this fiscal year as 
well. It was set to procure through NMC, which has a contract with 
GE. However, no prospects have been obtained for procuring a GE 
engine due in part to the trouble. 
 
However, as one senior official of the Air Staff Office said, "Even 
if it is not possible to select a company that deals with the 
procurement of a sixth engine, we can press ahead with efforts, 
while engaging in the development. There will be no impact on such 
matters as the time to equip it on a CX transport aircraft," some 
take the view that the impact of the scandal involving Moriya on the 
CX engine will be limited. 
 
7) Yamada Yoko Corp. contributed 6 million yen to Ozawa 
 
YOMIURI (Page 2) (Full) 
October 23, 2007 
 
The office of Democratic Party of Japan (DPJ) President Ozawa 
announced yesterday that his two political organizations had 
received a total of 6 million yen in political donations from Yamada 
Yoko Corp., a trading firm specializing in defense and aircraft 
equipment. The office said that it will return all the money. 
 
According to the office, the Rikusankai, Ozawa's funds management 
organization, received 500,000 yen in donations every year from 1995 
through 1999, totaling 2.5 million yen. The Jiyuto (Liberal Party) 
Iwate prefecture 4th branch office, headed by Ozawa, received 
500,000 yen during a period from 2000 through 2003, and from 2004 
through 2006, the DPJ Iwate prefecture 4th branch office got the 
same amount every year, totaling 3.5 million yen. 
 
An office member said: "We will take the necessary procedures to 
return the total amount of money to Yamada Yoko Corp. on the morning 
of the 23rd. Although there are no cozy ties with the company, we 
decided to return the money so as not to invite misunderstanding." 
 
8) Yachi to visit US 
 
MAINICHI (Page 3) (Full) 
October 23, 2007 
 
Administrative Vice Foreign Minister Shotaro Yachi will visit the 
United States on an Oct. 24-27 schedule to meet with Deputy 
Secretary of State Negroponte and other US government officials, the 
 
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Foreign Ministry announced yesterday. Yachi will talk with them 
about a new antiterror legislative measure and Japan's host nation 
support ("omoiyari yosan" or "sympathy budget") for US forces in 
Japan. Asian and Oceanian Affairs Bureau Director General Kenichiro 
Sasae and other Foreign Ministry officials will also leave for the 
United States today. Sasae will meet with his US counterparts, 
including Assistant Secretary of State Hill, chief delegate to the 
six-party talks over North Korea's nuclear issue. 
 
9) Defense minister orders committee to produce final report this 
month on correction of oil and discarded log by MSDF 
 
YOMIURI (Page 4) (Full) 
October 23, 2007 
 
TOKYO 00004931  006 OF 008 
 
 
 
In the wake of the revelation of a series of improprieties, 
including the correction of the amount of oil provided to a US oiler 
by the Maritime Self-Defense Force, the Defense Ministry yesterday 
held an inaugural meeting of the committee to study ways to ensure 
civilian control, chaired by Defense Minister Shigeru Ishiba. Ishiba 
ordered the committee to produce a final report before the end of 
the month on the correction of the amount of oil provided to the US 
refueler and a logbook discarded by the MSDF. 
 
Ishiba started off the meeting with the remark, "Closely associated 
with civilian control, these are extremely vital." He then ordered 
the committee to study the following before the end of current 
fiscal year to report back to him: (1) a review of the organization, 
including the relationship between the SDF personnel and Defense 
Ministry internal bureaus officials, (2) a review of external 
explanations, including Diet replies by SDF personnel, (3) 
educational and mentality reforms, and (4) a review of paperwork on 
checking Diet replies. 
 
Reports presented by the Defense Ministry to the ruling and 
opposition parties yesterday made it clear that although a section 
chief of the Maritime Staff Office had been aware of the erroneous 
data on the amount of oil six days before then Defense Agency 
Director-General Ishiba was to report on the incorrect amount at the 
Diet on May 15, 2003, the section chief failed to report on it to 
his superior. 
 
Afterward, the section chief has been serving as a state-paid 
secretary to Liberal Democratic Party lawmaker Satsuki Katayama. He 
 
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tendered a resignation to Katayama yesterday. 
 
10) Outline of the report compiled by the Defense Ministry 
 
YOMIURI (Page 4) (Full) 
October 23, 2007 
 
(Correction to the amount of fuel supplied) 
 
? Maritime Self-Defense (MSDF) supply vessel Tokiwa on Feb. 25, 2003 
supplied approximately 800,000 gallons of fuel to the US oiler 
Pecos. Around Feb. 26, the Maritime Staff Office Operations and 
Plants Department Operations Division   erroneously entered the 
amount supplied. 
? The director of the division and several others realized the error 
on May 9 the same year. However, they did not report the error to 
their superiors in the idea that another bureau was responsible for 
fuel matters and that the issue of indirect supply of fuel to the 
aircraft carrier Kitty Hawk was quieting down. 
 
(Disposal of logbook) 
 
?  A crewmember of the supply vessel Towada on July 26, 2007, put 
the ship's logbooks covering from July through December 2003 through 
a shredder by mistake without obtaining approval from the captain. 
The shredded documents were then incinerated. 
 
11) Maritime Staff Office section chief recognized error involving 
amount of supplied oil before then Chief Cabinet Secretary Fukuda's 
press conference 
 
ASAHI (Page 1) (Full) 
 
TOKYO 00004931  007 OF 008 
 
 
October 23, 2007 
 
It was learned yesterday that although a section chief of the 
Maritime Staff Office had recognized on May 9, 2003, the 
misreporting of the amount of oil (actually 800,000 gallons) 
supplied by a Maritime Self-Defense Force (MSDF) supply vessel to a 
US tanker in February 2003, he had not reported it to his superior. 
Prime Minister Fukuda (then chief cabinet secretary) therefore had 
to report in a press conference that the amount was "about 200,000 
gallons." The information-sharing and crisis-management systems in 
the government are likely to be called into question. 
 
According a report (compiled by the Defense Ministry), the section 
chief noticed the error on May 9, but since he did not report it to 
his superior, then Chief Cabinet Secretary Fukuda in a press 
conference on the afternoon of the same day and then Defense Agency 
Director General Ishiba in a Diet reply on Oct. 15 both said the 
amount of supplied oil was 200,000 gallons. 
 
Moreover, according to the report, the force deployed in the Indian 
Ocean constantly sent accurate data to the Maritime Staff Office 
section. Without checking such data, then Joint Staff Council 
Chairman Toru Ishikawa announced at a news conference on May 8 that 
the amount was 200,000 gallons. Based on this announcement, the 
government reportedly drew up guidelines for Diet replies 
 
12) "The series of scandals involving the Defense Ministry are 
regrettable," says prime minister, considering their possible impact 
on new antiterror legislation 
 
YOMIURI (Page 4) (Full) 
October 23, 2007 
 
Regarding the possible impact of a series of scandals involving the 
Defense Ministry on the new antiterror special measures legislation, 
Prime Minister Fukuda yesterday evening noted, "It is very 
regrettable that scandals occurred right on our doorstep. I hope the 
new legislation and international cooperation will be considered 
separately. But it will be difficult." He thus indicated his view 
that scandals involving the Defense Ministry are bound to affect 
Diet deliberations on the legislation. Fukuda then once again 
indicated his intention to aim for passage of the new legislation 
during the current Die session, noting, "I hope the legislation will 
obtain Diet approval, if possible. We must do our utmost in order to 
realize that." He made these comments to reporters at the Prime 
Minister's Official Residence (Kantei). 
 
13) MOF counters MOFA opposition to ODA cut, saying, "Japan's ODA 
still ranks first among G-7 nations" 
 
YOMIURI (Page 9) (Full) 
October 23, 2007 
 
The Ministry of Finance (MOF) yesterday countered the Ministry of 
Foreign Affairs' (MOFA) opposition to cut official development 
assistance (ODA), providing data to the Fiscal System Etc., Council, 
an advisory panel reporting to the finance minister. The data 
indicated that Japan's ODA continues to rank first among the Group 
of Seven industrialized countries in term of a ratio to its national 
tax revenues. 
 
Japan had been competing for the no. 1 ODA donor slot with the US 
 
TOKYO 00004931  008 OF 008 
 
 
since the late 1980s. However, following a series of cuts in the ODA 
budget in the wake of the nation's fiscal reconstruction policy, it 
gave up first place to the US in 2006. The second spot went to 
Britain. The ODA budget for fiscal 2007 (72.93 billion yen) dropped 
to nearly 40 PERCENT  smaller than the peak level recorded in fiscal 
¶1997. 
 
However, according to the data provided by MOF, the ratio of Japan's 
ODA to its national tax revenues was 2.5 PERCENT  in 2006. It has 
maintained the top slot for the nine consecutive years. MOF insisted 
that the point that Japan's position in the international community 
has declined is irrelevant." MOFA has requested 815.3 billion yen in 
its general-account budget request for fiscal 2008, up 11.8 PERCENT 
from the fiscal 2007 level. However, MOF intends to slash the ODA 
budget by 3 PERCENT  from the fiscal 2007 level as stipulated in the 
budget request guidelines. 
 
SCHIEFFER