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Things rarely happen in isolation in Japan – it is just that it is difficult for an outsider to see the links

After months if not years of what seemed to be complacency, the Japanese
financial regulators industry have shown a remarkable vigour recently.

They have moved against the management of collapsed software company Livedoor
and Yoshiaki Murakami, Japan’s best known corporate raider.

In the accounting area they hit Pricewaterhouse Coopers’ local affiliate –
Chuo Aoyama PwC.

If you had not already guessed there is an election looming. Prime minister
Junichiro Koizumi steps down in September. His favoured successor, Shinzo Abe,
looks less and less like a shoe-in however, as political opponents seek to
exploit a voter backlash against Koizumi’s reforms.

In particular the Japanese are offended by the growing inequality in wealth.
They find displays of wealth vulgar and people sleeping rough in Tokyo’s parks
are considered a national humiliation – but Japan has recently had to get used
to both. What has always been one of the most egalitarian and consensual
societies in the world is showing severe signs of strain as a result.

People are reconciled to the fact that Japan’s social fabric will have to
bend a bit to adjust to globalisation. Their concern is that if it is bent too
much it will fracture. So Abe’s rivals could get considerable support with a
promise to roll back the reforms.

That helps explain why the regulatory bureaucrats have been let loose to
clamp down on corporate wrongdoing and excess.

If in the process it means people and businesses get hung out to dry for
things previously deemed to be acceptable, then that’s politics – and not just
in Japan either.

Anthony Hilton is finance editor of the Evening Standard

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