Although SCAP is often criticized for doing little to reform Japan's bureaucracy, it did in fact
carve up government personnel and agencies rather considerably. Of government employees,
1,809 were formally purged. Many thousands more were either fired or forced to resign,
― 177 ―
most of them in the opening months of the occupation: 4,800, nearly all police officials, were
fired from the Home Ministry in October 1945 as a result of the bill of rights directive; 115, 778
teachers resigned under pressure from the Education Ministry, and 5,211 more were in effect
purged; Yoshida fired 7,500 nationalists in the Foreign Office. Of the twelve cabinet-level
ministries in existence at the end of the war, the Japanese abolished three—the Army and Navy
ministries and the Ministry of Greater East Asia. The cabinet quickly converted another, the
Munitions Ministry, into the Ministry of Commerce and Industry, which became the Ministry of
International Trade and Industry in 1949. With SCAP approval the Home Ministry was
abolished in 1947, and its functions were parceled out to other agencies; and the Justice Ministry
was reorganized. Several new ministries were set up during the occupation, such as the Labor
Ministry, the Ministry of Welfare, the Ministry of Postal Services and Communications, and the
Ministry of Transportation. All criticisms to the contrary, the bureaucracy was extensively
pruned, and the structure of many ministries was significantly revised.[39]
In the summer of 1948, when the national public service issue was being debated and the new
legislation enacted, one of the biggest political scandals in modern Japanese history was welling
up and engulfing many prominent victims. The Showa Denko (Showa Electric) Company,
Japan's largest manufacturer of fertilizer, had obtained huge loans from the Reconstruction
Finance Bank (RFB), a government financial institution set up in 1946 with occupation blessing
to help finance development projects. The RFB had got the reputation of lending money without
adequately checking the reliability and creditworthiness of recipients. Public prosecutors began
an investigation of RFB's connections with Showa Denko in May 1948, seized company
documents, and in June arrested its president on charges of having bribed government officials.
Among those arrested were a former finance minister in the Katayama cabinet and a senior
Finance Ministry official, Fukuda Takeo, who was later acquitted and in 1976 became prime
minister of Japan.
Next the deputy prime minister, Nishio Suehiro, was arrested on a charge of having received a
bribe of œ1 million (about $3,300). The day after, October 7, the cabinet decided to resign. On
December 7 Ashida himself was arrested. All told, sixty-four persons were arrested and charged
with having received some œ6 million (about $20,000) in bribes.[40]
It was rumored that an even larger amount had been used to in-
― 178 ―
fluence foreigners, meaning members of the occupation. That officers in GS were a favorite
target of the rumormongers was ironic because only a few months earlier Kades had induced the
government to make a thorough, but eventually fruitless, investigation of the "hoarded goods
scandal," which involved possibly as much as $2 billion worth of military supplies and
equipment illegally diposed of at the end of the war.[41]
In 1958 Ashida and Nishio were finally acquitted after ten years of trials, an example of the
excessively protracted judicial proceedings that are so frequent in Japan. In the end, of the sixty-
four persons arrested, only two were convicted and sentenced to prison terms. Almost none of
the money allegedly used for bribes was ever traced or even accounted for.