Under the banner of “fundamentally strengthening defense capabilities,” the government has been ramping up defense spending and expanding policy support to related industries.

Meantime, a scandal has come to light centering on systematic and structural collusion between the Maritime Self-Defense Force (MSDF) and a leading defense contractor regarding submarine inspections and repairs.

An exhaustive investigation is the only way to get to the bottom of the seemingly cozy and corrupt ties between the SDF and the defense industry, which has produced many scandals based on unethical partnerships, and identify and eliminate the factors behind this deep-rooted problem.

Kawasaki Heavy Industries Ltd., a heavy machinery manufacturer that builds submarines for the MSDF, is suspected of using slush funds generated through fictitious transactions with subcontractors to provide goods, gift vouchers and wining and dining hospitality to submarine crews.

The National Tax Agency’s Osaka Regional Taxation Bureau reportedly uncovered the creation of slush funds amounting to over a dozen billion yen and is demanding that the company pay back taxes plus a “heavy additional tax” for punitive purposes, amounting to at least 600 million yen.

Submarines must undergo annual inspections and a regular maintenance process every three years after being put into commission. Crew members are said to have received various benefits during stays at Kawasaki Heavy’s lodging facilities in Kobe, where they attended inspections.

Outrageously, crew members even requested specific items. This clearly shows that the submarine crew members failed to draw a clear line between their work duties and their private lives and comply with the ethics standards for public servants.

Kawasaki Heavy receives over 10 billion yen annually to carry out inspections and maintenance work under contract. The Defense Ministry said that no overcharging for the creation of slush funds has been confirmed so far. However, if the contract to provide the ministry with submarine maintenance service is lucrative enough to encourage the company to create slush funds for the collusive practice, the ministry should be suspected of unreasonable pricing and a lack of cost awareness.

Major defense contractors are benefiting greatly from increased orders following the revision of three key security policy documents at the end of 2022, which led to the policy decision to “double” defense spending and related budgets.

Last year, a law was enacted to strengthen policy support for the defense industry. This situation makes it even more important to ensure greater transparency in relations between the government’s defense department--the Defense Ministry and the SDF--and the defense industry.

On the basis of a report from Kawasaki Heavy, the ministry established an investigation committee within the MSDF in April to investigate the crew members involved for violations of the SDF Personnel Ethics Law. Moreover, acknowledging the gravity of the matter, Defense Minister Minoru Kihara on July 5 ordered a “special defense inspection,” an independent probe conducted by the ministry’s Inspector General’s Office of Legal Compliance.

The slush fund operation by Kawasaki Heavy is suspected to have continued for about 20 years. What was the purpose? Why were lessons from other scandals not utilized to prevent this latest case of corruption? Only a thorough investigation into why illegal benefits were channeled to MSDF personnel will answer these and other questions.

At the same time, the ministry should make a sweeping review of its relations with not just Kawasaki Heavy but the entire defense industry to eradicate corruption and other forms of misconduct.

Raising corporate, income and tobacco taxes is expected to partially fund the defense budget increase. However, fearing public backlash, the government and the ruling coalition have yet to decide on the specific plans, including the timing, to raise the taxes.

If the government wishes to gain public support and understanding for the increased financial burden stemming from defense spending growth, it must clearly demonstrate a commitment to wiping out collusive practices from all its relations with contractors.

--The Asahi Shimbun, July 6