Finance Ministry 'sisters' needed


Following the Lehman shock a decade ago, numerous leaders have stated that Lehman “Sisters,” instead of the Lehman Brothers, would have prevented the worst financial crisis of the century. More recently, Prime Minister Shinzo Abe started using his version of the phrase in his gender promotion speeches. “Lehman Brothers and Sisters would have saved the bank.” Today, it may be a perfect analogy for the Finance Ministry. Even a slight diversion from the complete homogeneity among senior officials at the Finance Ministry could have helped them avoid the humiliating scandals which are tarnishing the elite ministry’s reputation for years to come.

Although two recent scandals — one involving the discount sale of government-owned land to the Moritomo Gakuen school operator and the other involving alleged sexual harassment by Administrative Vice Finance Minister Junichi Fukuda — are very different in nature, the common thread is a one-dimensional workplace culture in which the best and the brightest from top-ranked schools join the ministry and gradually lose their ability to embrace diverse views, values and perspectives. Eventually, their ability to think and act critically can be severely compromised in the monocultural environment.

The behavior and thought processes of elite bureaucrats become synchronized and harmonized with particular intensity when those individuals all share the same social and economic backgrounds. This phenomenon is amplified by a promotion system that rewards those who conform and agree unconditionally to powerful lawmakers and punish those who take risks by demanding more diverse approaches.

The investigation on the Moritomo school scandal is still ongoing, but at this point it does not seem that any officials at the ministry or its regional Kansai office benefited financially from improper land transactions involving the school. It is truly mind-boggling to imagine anyone with common sense would tamper with these official documents and make more than 300 alterations and deletions. Speaking under oath to questioning in the Diet, the director general responsible when the documents were altered categorically denied any involvement from politicians. However, the question for his motives remains unanswered.

Perhaps it was a perfect storm. The brilliant minds of the Finance Ministry subordinates have achieved a near perfect ability to succumb to obedient behavior dictated by their seniors? When all these elements are combined with a complete lack of critical thinking, unfathomable mistakes can happen. In this homogeneous group of individuals, there tends to be an inflated sense of confidence that their decisions and actions are in line with those actually needed and desired by others. They, in a sense, become oblivious to the possibility they could be wrong.

Individuals who do not share exactly the identical backgrounds could mitigate this overconfidence bias by voicing differing perspectives. Of course, they would only do so if there was no fear of reprisal. In fact, Lehman Sisters simply serves as a metaphor for anyone who is different from the current Finance Ministry leadership.

For instance, younger officials with various ranks and laterally hired staff, regardless of their gender, can also bring different views and questions to the table. This does not mean to imply those belonging to minority groups are wiser or have better judgment. It simply means a diverse group, without a uniformly shared value system, tends to be far more rigorous in their approach to collective decision making. Diversity is one of the most effective means of strengthening risk control mechanisms in social and business contexts.

The sexual harassment allegation against the former top bureaucrat of the Finance Ministry is yet another example that a lack of diversity among leaders has hampered their ability to handle crisis management. The recorded conversation between Fukuda and a female reporter revealed a clear violation of a reasonable code of conduct expected in any civilized society and the basic civil rights of women. It was bad enough for the top bureaucrat in charge of arguably the most powerful governmental institution to be engaged in sexual harassment.

Equally disappointing, the handling of these allegations damaged what was left of the ministry’s credibility. When the Finance Ministry began an investigation into its vice minister’s conduct, the first thing they did was to ask the journalist who was anonymously quoted by the weekly magazine to come forward and speak to an outside law firm retained by the ministry. Wouldn’t it be natural to assume an immediate conflict of interest, as the law firm serves a very powerful client, the ministry itself? Instead, an independent body should have been enlisted to conduct an unbiased investigation, which would have produced a more balanced and honest assessment of the accusations.

This all would seem like common sense to those who are aware of the delicate and deeply disturbing situations involving sexual harassment in Japan. There are distinct reasons the #MeToo movement has not gained much traction in Japan, as compared with other countries. It is no surprise that there are almost no senior-ranking women at the Finance Ministry. Again, this is much more than just a gender equality and sexual harassment issue. It is about re-establishing the full trust and validity of the ministry and instilling a renewed sense of pride and decency among all ministry officials who are deeply dedicated to the public service.

Truly, most officials at the Finance Ministry are respectful and honorable individuals with brilliant intellects, who have chosen to devote their lives to serve the people of Japan. In the current system, however, there are blind spots that influence the ministry’s decision making process. The recent scandals will hopefully serve as a wake-up call to a once highly admired institution.

Yumiko Murakami is head of the OECD Tokyo Centre, where she engages in policy discussions between the OECD and governments, businesses and academia in Japan and Asia, covering a wide range of economic policy issues.



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