A July 10, 2020 examination of the administration of Japan’s COVID-19 sustainability grants, the subcontract from the Service Design Engineering Council to Dentsu, the explained ¥2 billion difference, opposition claims of “skimming” and a “dummy corporation,” and NHK’s role in amplifying a politically manufactured narrative.

July 10, 2020
The Manufactured Narrative of “Skimming”: COVID-19 Business Grants, the Dentsu Subcontract, Opposition Political Theater, and NHK’s Responsibility
The following is a continuation of the preceding chapter.
This text is taken from an article by journalist Takayuki Hikawa published in the monthly magazine WiLL under the title “How Many Tongues Does His Excellency Azumi Have?”
The COVID-19 crisis caused many small businesses and sole proprietors to lose revenue and face the threat of closure.
The Japanese government established the Sustainability Benefit program to deliver cash as quickly as possible to businesses in danger.
Receiving, examining, and processing an enormous number of applications within a short period required a large administrative operation.
The Ministry of Economy, Trade and Industry entrusted the administrative work to the Service Design Engineering Council, which subcontracted most of the operation to Dentsu.
Opposition politicians and sections of the major media described this arrangement as “skimming,” “passing the entire job to another company,” and the use of a “dummy corporation.”
Their language created the impression that an opaque transfer of benefits had taken place between the government and Dentsu.
According to Hikawa’s article, however, the government repeatedly explained the approximately ¥2 billion difference between the ¥76.9 billion contract and the ¥74.9 billion subcontract.
A substantial portion of the difference consisted of bank transfer charges and other specified administrative costs.
Despite those explanations, opposition politicians continued to repeat the emotionally powerful accusation of “skimming” rather than examining the details.
This article concerns more than the subcontract itself.
It describes political theater in which opposition lawmakers traveled to an office with the media even though they had already been informed that all employees were working remotely and that the office was empty.
They then allowed cameras to record them repeatedly calling an unanswered intercom.
It also concerns the responsibility of major media outlets, including NHK’s News Watch 9, which failed to explain the background and instead left viewers with the impression that the organization had no genuine operations.
The following statements and assessments are recorded as arguments and testimony contained in Hikawa’s article.
The Dentsu Subcontracting Controversy
During the final stage of the Diet session, opposition parties focused their attacks on the outsourcing of administrative work for the Sustainability Benefit program for small and medium-sized businesses.
On the morning of June 1, six opposition lawmakers, including Hiroshi Kawauchi of the Constitutional Democratic Party and Shu Watanabe, a senior member of the Democratic Party for the People, entered a multipurpose building on a main road in Tsukiji, Tokyo.
Their destination was the office of the Service Design Engineering Council, which had received the contract from the Ministry of Economy, Trade and Industry.
Accompanied by waiting reporters and television crews, the lawmakers went to the second floor.
When Watanabe lifted the white intercom receiver at the entrance, camera flashes went off simultaneously.
“Hello? Hello? Nobody is answering. Professor Ogushi, please try next.”
Hiroshi Ogushi of the Constitutional Democratic Party then spoke into the receiver.
The flashes went off again, but naturally there was no response.
“Professor Kawauchi, please go next.”
One after another, the lawmakers called into the unanswered intercom while remaining conscious of the cameras.
A reporter, wondering why the office was unoccupied despite the planned visit, asked:
“Did you inform them that you were coming?”
Watanabe replied:
“Actually, about an hour ago the ministry told us that everyone was working remotely and that there would be no employees in the office today, but we decided to come anyway.”
In other words, the lawmakers knew in advance that the office was empty because of remote working.
Nevertheless, they visited with the media in order to obtain images of an unanswered office.
They then described the council as a “ghost company” and a “conduit company,” creating the impression that it had no real substance.
What I found particularly problematic was that NHK’s News Watch 9 did not adequately explain this simple background.
It showed an apparently unresponsive office without making sufficiently clear that the lawmakers knew before arriving that no employees would be present.
A responsible news organization should not merely show images of an empty office.
It should explain why the office was empty, when the lawmakers learned that fact, what practical purpose the visit served, and why the media had been invited to accompany them.
On June 9, Constitutional Democratic Party leader Yukio Edano questioned Prime Minister Abe in the House of Representatives Budget Committee.
Because approximately 97 percent of the project had been subcontracted to Dentsu, Edano asked whether the arrangement represented nonperformance by a “Dentsu dummy corporation.”
Of the ¥76.9 billion project, ¥74.9 billion had been subcontracted to Dentsu.
The government, however, repeatedly explained the approximately ¥2 billion difference, including bank transfer fees that accounted for a substantial portion of it.
The opposition continued to describe the difference as “skimming.”
That word suggests that an intermediary performed little or no work while extracting an unjustified profit.
If the difference included bank charges, administrative management, and other actual expenses, those items needed to be examined individually before any conclusion could be reached.
The existence of a difference alone did not prove improper profit-taking.
Hikawa argued that, after long-term reductions in the number of government personnel, large-scale outsourcing was unavoidable if benefits were to reach businesses quickly.
The use of an intermediary organization for administrative contracts also had precedents.
According to the article, after completing his questioning in the Budget Committee, Edano remarked to people around him:
“I feel sorry for Dentsu. The Ministry of Economy, Trade and Industry cannot handle the operation itself, so it is asking Dentsu to take on an extremely difficult job.”
If this statement was accurately reported, Edano understood the practical reason for the subcontract.
In the Diet, however, he publicly attacked the arrangement as involving a “Dentsu dummy corporation.”
The project included more than five hundred application-support locations throughout Japan, together with application review, public information, inquiries, and payment processing.
A senior ministry official stated in the article that the council’s proposal was substantially better than the competing plan submitted by Deloitte Tohmatsu and would allow benefits to be distributed more rapidly.
Because enormous amounts of public money were involved, the bidding process, subcontractors, expenses, and actual work unquestionably required strict examination.
The government had a duty to explain any lack of transparency.
Such examination, however, should have been based on contracts, spending records, services actually performed, competing bids, the number of applications processed, and the speed of payments.
It should not have been based on a staged visit to an office known to be empty or the repetition of labels such as “skimming” and “dummy corporation.”
If opposition politicians understood that no illegality had been established but still concentrated on manufacturing suspicion, their purpose was not to reveal wrongdoing.
It was to increase public distrust of the Abe administration.
The pattern resembled the political campaigns concerning Moritomo Gakuen, Kake Educational Institution, and the cherry blossom viewing parties.
No matter how often the government explained, opposition politicians and left-leaning media repeated the familiar claim that “the suspicions have only deepened.”
The continued existence of suspicion became more important than determining the facts.
Major media outlets amplified the images and language prepared by the opposition without adequately examining the political theater behind them.
Viewers were left with the impression that the government had simply passed the work to Dentsu and allowed the company to take an improper profit.
Politicians manufactured suspicion, the media amplified it, and public distrust followed.
This cycle was a serious structure of political information management in Japan.
Monitoring the government is a vital responsibility of both opposition parties and the press.
Monitoring, however, means investigating facts.
It does not mean deciding on a conclusion in advance and selecting only the images and language that support it.
The real questions were whether the work was properly performed, whether the costs were reasonable, and whether benefits reached businesses quickly.
The repeated performance at an intercom outside an office known to be empty answered none of those questions.
If the opposition and the major media repeatedly used the word “skimming” while failing to explain the government’s account of the ¥2 billion difference and the actual nationwide work performed, their conduct cannot be described as fair scrutiny.
It was political impression management.
To be continued.