In terms both of its scale and of its political consequences, the Recruit scandal was perhaps the most serious since the war. It came to be regarded as the type case of 'structural corruption'.
The Recruit Co. Ltd. was a middle-ranking company engaged in providing information about job vacancies for job seekers, and about potential recruits (students etc.) for companies wishing to recruit new staff. It was a company with a determination to expand and was moving into a wide range of information services at a time when computers were beginning to be widely available. In June 1988 a journalistic investigation in Kawasaki City, just south of Tokyo, found that the Recruit Co. had been floating subsidiary companies and trading in their unlisted shares. It was discovered that, after the floating of a company called Recruit Cosmos, unlisted shares had been distributed to a large number of influential people, including parliamentarians from various parties, Cabinet ministers, Government officials, newspaper proprietors, officials of NTT (Nippon Telephone and Telegraph) and so on.
In October 1988 the Tokyo Prosecutor's Office began an investigation and arrested several people, including the Chairman of the Recruit Co., Ezoe Hiromasa. Ezoe was an extremely ambitious young businessman, determined to propel his company into the first rank. He had the drive and skill to exploit the insatiable need of politicians and others for funding, in order to gain influence rapidly.
The political repercussions of the Recruit affair were extensive. It was found that Ezoe had targeted practically the whole political class, including members of both Government and opposition parties. Among Government leaders, the former Prime Minister, NAKASONE YASUHIRO, the LIBERAL DEMOCRATIC PARTY (LDP) Secretary-General, ABE SHINTARŌ, the current Minister of Finance, MIYAZAWA KIICHI, and the Prime Minister, TAKESHITA NOBORU, were found to have received large quantities of unlisted shares in Recruit Cosmos, able to be sold at a profit once the shares were listed on the stock exchange. Miyazawa had to resign his Cabinet position, Nakasone temporarily left the LDP, but the most severe effects were suffered by Takeshita-already in trouble over other issues-who in April 1989 was forced to resign as Prime Minister. Takeshita's former secretary, who had been responsible for the transactions with Recruit, committed suicide. Only two politicians, one from the LDP and one from the CLEAN GOVERNMENT PARTY (Kōmeitō) received punishment as the result of judicial process. For a case to be successful, it was necessary to prove that a gift of money or shares had been traded for favourable treatment in relation to legislative initiatives. In most cases, this was exceedingly difficult to prove.
The Recruit scandal focused popular attention on issues of structural corruption, and was a major factor leading to a tightening of the anti-corruption laws several years later, in 1994.