Municipalities that no one cares about are the target” and “Town halls are idiots”… The dark side of the “depopulation business” that has siphoned off ¥400 million in public funds.

Preying on a town of 8,000 people. “Hyenas. “Consultants”.

Local development projects utilizing the corporate version of hometown tax payments by “tiny municipalities” that no one cares about are “superbly good money laundering” -.

The “marginal government offices” are ignorant and inept, suffering from financial difficulties and staff shortages due to depopulation, and the “hyena” consultants are exploiting the national system to siphon off public funds from these weak local governments. The book, “Depopulation Business” (Shueisha Shinsho), which highlights the corruption of public-private partnerships, has been receiving a favorable response since its publication in July 2013.

The author is Isao Yokoyama, 37, a reporter for the Kahoku Shimpo, a local newspaper based in Sendai City, Miyagi Prefecture. This book is based on the facts Yokoyama revealed in the Kahoku Shimpo’s morning edition from November 2010 to December 2012, and newly written with the addition of research and interviews that were not reported in the paper.

Since the start of the “local development” program in 2002, local governments have entrusted the formulation of comprehensive plans to consultants, and the exploitation of subsidies by unscrupulous consultants has become rampant. We interviewed Mr. Yokoyama to find out what kind of “depopulation business” tactics he uncovered.

The story takes place in Kunimi Town, Fukushima Prefecture, with a population of about 8,000. In September 2010, the town council approved a leasing project to develop and manufacture 12 high-standard ambulances that can provide life-saving treatment in the vehicle and lease them to neighboring municipalities. The project will be funded by 432 million yen donated by an anonymous company (later identified as three related companies including a major IT firm) through a corporate version of hometown tax payment.

While working for the Kahoku Shimpo’s Fukushima general office at the time, reporter Yokoyama learned about the high-standard ambulance leasing project from the minutes of a town council meeting during a separate report on Kunimi Town.

The town purchased 12 high-standard ambulances and leased them to other municipalities instead of using them in their own town. Furthermore, this project is a part of a public-private consortium project, and the source of funds for this project is the corporate version of hometown tax payments from companies related to the consortium, and the council decided to pay a commission for the project to the companies that offered to utilize the donations. According to the minutes of the meeting, the mayor said so even before the budget was voted on.

Common sense tells me that this is not right.Iintuitively thought I would look into it.

In December of that year, Kunimi Town commissioned the leasing of a high-standard ambulance to One Table, a stockpile food venture and regional development consulting firm in Tagajo City, Miyagi Prefecture.

The company is a Miyagi Prefecture company involved in a Fukushima Prefecture municipality project, which is also a party to the Kahoku Shimpo, which is headquartered in Sendai City. We started by researching what kind of company One Table was, and developed a hypothesis based on fragmentary information gathered from the Kahoku Shimpo’s database of past articles and administrative documents.

Since corroboration was necessary for an article, we read public information, organized events chronologically, and contacted people involved in the business to extract information, spending a little less than two months on this modest task.

Through her diligent reporting, Ms. Yokoyama discovered the following facts.

Only one company, One Table, participated in the competitive bidding for the ambulance leasing project. Prior to that, One Table had been entrusted with the secretariat of a public-private consortium in the town of Kunimi, and had even submitted a proposal to the town for an ambulance leasing project.

In addition, One Table formed a business alliance with an ambulance venture company. The ambulance venture was a subsidiary of an IT giant that had donated to Kunimi Town through a corporate version of “hometown tax payment,” and One Table ordered the manufacture of a high-standard ambulance using the donated funds eight months before Kunimi Town publicly solicited applicants for the project. As we would later learn, One Table was also involved in the preparation of the “specifications” to ensure that the ambulance venture would receive the order.

Companies that make a corporate version of the “hometown tax” can deduct up to 90% of the donation amount from their corporate tax and other taxes.

In the case of Kunimi Town’s project, the major IT company that made the donation received a tax credit and also earned a large amount of profit from the business orders of its subsidiary, the ambulance venture.

The facts uncovered in our interviews raised suspicions of “donation refunds” and “tax evasion,” as well as “collusion between the local government and consultants” and “provision of favors.

The local government is a fool if it lacks financial strength” and “the local assembly is a small fish.”

Once he had all the material for his article, Yokoyama interviewed the president of One Table.

In fact, I was still at a skeptical level regarding the business’s donation-reimbursement scheme and other matters. I could not say that the business scheme itself was completely black and white according to the explanation I received by telephone from the Cabinet Office, which has jurisdiction over the corporate version of the Furusato tax system.

However, when I interviewed the president of One Table, I could not help but think that he was exploiting a loophole in the system.

Immediately after interviewing the president, Yokoyama reported on the ambulance leasing business in the morning edition of the Kahoku Shimpo for four days from February 3, 2011. Immediately afterward, the Kahoku Shimpo received a great deal of information from all over the country.

Reporter Yokoyama obtained a sound recording of a conversation between One Table’s president and an outside party. In the recorded data, the president said, “We are the corporate version of Furusato and taxpayers’ money.

• We are using the corporate version of the hometown tax system to launder money. If a company donates 400 million yen, we get 400 million yen.
• [Claire]. We want a tiny municipality that gets ignored. A municipality that no one cares about.
• Municipalities with a financial strength index of less than 0.5 are not even people. To put it bluntly, they are idiots. Ours is a “second government office. We’re taking over the administrative function itself.
• Local councils are small fry. We are more educated than they are, and they really want us to listen to them.

The true feelings of these local development consultants, who look down on local governments and prey on them, are expressed in an almost naked manner.

Yokoyama writes in “Depopulation Business” that the most unforgivable comment he heard was, “It’s good to have a tiny municipality that gets ignored. Was it at that moment that the spirit of the local newspaper reporter flared up?

He said, ” There were several stages, but I was still extremely angry when I heard the recorded data. He was born and raised in an underpopulated area of Hokkaido, and he is from a rural area. I wondered how he could prey on the rural areas.

This is my imagination, but I think he had some kind of love-hate relationship with the rural areas. He had a sense of mission, “I will do something about it,” and a sense of contempt, “That’s why it’s no good. He was just too indifferent to the state of the region.”

In March 2011, Yokoyama released a total of 11 follow-up reports and published the audio data of the president on Kahoku Shimpo’s official YouTube page.

In response to the series of reports, One Table’s president stepped down from his post as president, saying, “I take responsibility for my remarks.

Destroying Administrative Documents One by One…

Kunimi Town, on the other hand, has cancelled all contracts with One Table and decided to discontinue the ambulance business, a swift reversal of course from the mayor, who had made the strong statement at a town council meeting two weeks ago that he was “trying to do a noble thing for the town” and “I have no right to be told by the newspapers that Kunimi is Kunimi.

I am just a listener. All I can do is write articles. I believe that readers would agree with me, and I have consistently written that it is strange that local autonomy, the foundation of democracy, is being neglected.

However, the executives of Kunimi Town do not seem to have the slightest awareness that they are being neglected. They have entrusted depopulation countermeasures to consultants, and have accepted public-private partnership projects that do not benefit the town’s residents. The waste of public funds does not bother them. Isn’t the “marginal town hall” (a term coined by Mr. Yokoyama), where thinking has stopped and governance has failed, a major problem?

That is the biggest problem. The president of One Table resigned to take responsibility. The town hall, including the mayor and other senior officials, have taken no responsibility. In the first place, they were the ones who allowed One Table to do whatever they wanted, and they have lost all awareness of the fact that they are handling public money. I thought, ‘Screw this.

The mayor of Kunimi explained to the town council about the purpose of promoting the public-private partnership project, “What Kunimi wants most is to promote Kunimi Town in cooperation with companies and to increase the name value of the town. Did he really think that this would benefit the town’s residents? What did the mayor want to do with the town?

He probably just wanted to create his own track record with a prominent project. I don’t think he was serious about the project, since he didn’t prepare a business plan or conduct a demand survey for the ambulance lease.

It is also surprising that the Kunimi Town officials had destroyed all related documents and e-mails.

I have a feeling that this is not the first time thatKunimi Town Hall has suffered from poor governance and a lack of compliance awareness on the part of its employees.

The town council also failed to fulfill its function as a check on the administration.

The council, which approved the public-private consortium project, certainly bears some responsibility. However, I don’t think it is fair to blame them too harshly. With no new council members and little interest from the public in the issues facing the town, the council members are not the only ones to blame.

The council members also regretted that they had overlooked the problem. That is why they formed the Article 100 Committee and invited witnesses. It was only after the Hundred Articles Committee pursued the issue that the fact that Kunimi Town had destroyed every single piece of administrative documents, including e-mails exchanged with the company and materials provided by the company, came to light.

The fact that the staff members in charge had provided the materials to One Table prior to its decision and that their actions constituted a favoritism. It was also the Hyakujo Committee that revealed that the ambulance project was in fact a negotiated contract that did not go through a fair and impartial bidding and contracting process.

In the November 10, 2012 mayoral election, the incumbent mayor in question lost the election due to the harsh judgment of the town’s residents. Unusually for a mayor of a local government, he finished his term of office after only one term of four years.

On the 22nd of the same month, the Secretariat for the Promotion of Regional Development of the Cabinet Office rescinded the approval of the “Regional Revitalization Plan” for Kunimi Town. The then Minister of State for Special Missions of the Cabinet Office stated the basis for the decision: “We judged that the town had provided favors in exchange for donations.

The Irony of Regional Development Becoming a “Hotbed of Depopulation Business

Since FY 2013, the Japanese government has required local governments to disclose the names of companies that donated money when they conduct business using the corporate version of the Furusato tax system. This may have made the corporate version of the Furusato tax system more transparent to some extent.

However, the “depopulation business” will not disappear as long as there are local governments that do not have a clear sense of the issues and entrust the future of their regions to consultants, and consultants that try to siphon off government subsidies and subsidies from the regions.

As for the national government, it ignores local conditions, selects ineffective project plans, distributes subsidies, and does not verify the results.

The government just disburses grants and does nothing to check the results,” he said. Then, why is it necessary to disperse the money? It is because of the concentration in Tokyo.

Ever since I was in elementary school, I have been told that the concentration of people in Tokyo would lead to a decline in the local population and deprive the regions of their vitality. The government knows this, but has done nothing about it. The result of neglecting the concentration of people in Tokyo has brought about various distortions in local government. That is my opinion.

The “regional development” program, which aims to “correct the concentration of power in Tokyo,” requires local governments to formulate a “local version of a comprehensive strategy” in order to receive subsidies. However, the reality is that for municipalities lacking staff with expertise and analytical skills, the formulation of advanced plans required by the government is a high hurdle. As a result, a structure has emerged in which policy formulation is thrown to private-sector consultants.

The regional development that was supposed to correct the concentration of people in Tokyo has ironically turned into a breeding ground for the “depopulation business,” which takes advantage of depopulation as a source of revenue.

Incidentally, it appears that the 12 high-standard ambulances that were left stranded by the cancellation of the lease project in Kunimi Town will be transferred free of charge to any local government that wishes to use them.

IsaoYokoyama is a reporter for the Kahoku Shimpo editorial department. Born in Aomori Prefecture in 1988, he was assigned to the Fukushima General Bureau from April 2009 to March 2012. In 2013, he won the Newspaper Workers’ Union Journalism Grand Prize for his “series of reports on the alleged reflux of donations from the ‘corporate version of Furusato Tax'” and the Kikuchi Kan Prize for his book “The Depopulation Business” (Shueisha Shinsho).

Click here to purchase “Chikara Business” (written by Isao Yokoyama, Shueisha Shinsho).