Freeloaders' Paradise

With characteristic reverence for custom and ritual, the Japanese have perfected such arts as flower arranging, tea serving, paper folding--and now expense-account living. In recent years, The Land of the Rising Sun has become the land of the rising expense account, to an extent that might excite blind envy among U.S. businessmen, long noted for their expertise in that area.

Japanese businessmen spent some $5 billion in mostly tax-exempt yen entertaining themselves and their clients last year--more than twice what the Japanese government spends on defense and at least 20% more than the outlay for education. The figure was up as much as 30% from 1971, which showed a 17% rise over the year before--despite a decline in Japanese corporate profits. About 1/2% of the country's gross national product now goes for corporate entertainment. So many salaried workers have expense accounts--including nearly every salesman--that the Japanese commonly refer to their country as shayo tengoku, or paradise for the corporate set.

Tab. Every important Japanese city from Kagoshima to Kushiro has its own throbbing neon-lit district of pubs, clubs and geisha houses that cater to the expense-account set. On Tokyo's Ginza alone, well-oiled businessmen drop some $500 million yearly at more than 1,000 bars and restaurants. Prices effectively screen out patrons who have only their own money to spend: dinner for two at Osaka's Yamato-ya restaurant costs about $230, while four Scotch-and-waters at a select Tokyo bar can run to $120, including a tray of hors d'oeuvres and fruit juice for hostesses that the bar employs to keep conversation going. At Osaka's Club Azami, a patron simply signs a tab, the club bills his company, and the bill is paid with no questions asked. "I don't know how much I spend there," says the president of an Osaka chemical company. "Such details are only for the accounting department of my company to handle." Nor are big bosses the only ones to benefit. A 30-year-old salesman for a Tokyo construction company spends $1,200 a month on entertainment, nearly twice his salary. "Some weeks I show up at the office with a hangover every morning," he says heroically. "But I have to endure it for the sake of my company."

A secret government investigation of 20 major companies not long ago uncovered information long familiar to other expense-account societies: anywhere from one-fifth to four-fifths of all entertainment expenditures are bogus. One hard-drinking salesman spent $3,000 a month at 38 different bars; investigators found that he usually drank alone. An executive put his daughter's wedding--bridal kimono, banquet, honeymoon and all--on his expense account. In fact, it is common practice in Japan to phone a friend at another company and ask permission to use his name for some fictitious entertainment. "I have done it whenever I needed a stiff drink for myself and my staff after a long spell of hard work," admits Toshimichi Natsume, a former Fuji Film Co. executive. "Then a few days later the friend would call back to reciprocate. As the saying goes, samurai must always sympathize with each other." The next step, as many an American could counsel the Japanese, is to use a friend's name without bothering to ask.

Businessmen justify their expense accounts on several grounds. Executive salaries in Japan are lower than in most other industrialized countries, and expense accounts are considered to be deserved compensation. Moreover, housing is in tight supply throughout the country, and many top executives are reluctant to invite business guests, especially foreigners, to their embarrassingly cramped homes. Government policy is sympathetic. Companies can claim a full tax deduction on entertainment expenditures up to one-quarter of 1% of their paid-in capital, plus another 4,000,000 yen (about $15,000).

Some Japanese grumble that expense accounts discriminate against workers who do not have them. Sukeya Abe, a Socialist member of the Diet, is about to submit a bill that would limit the tax-deductibility of entertainment expenditures. The bill is not likely to pass, and government administrators would be loath to enforce it if it did. Explains Abe: "It's always those top boys in the government who get entertained by executives most lavishly."

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