The U.S.-Japan Foundation supports part of the expenses of National Public Radio's reporter in Hong Kong. An article in last Sunday's Outlook incorrectly stated the foundation paid for a full-time NPR correspondent in another Asian city. (Published 1/25/90)

THE CHAIRMAN of the United States-Japan Foundation bills it as the most-active philanthropic institution supporting projects and research about U.S.-Japan relations, and the list of worthy causes backed by the foundation's money is impressive indeed.

Grants from the foundation help to pay for National Public Radio's full-time correspondent in Tokyo; foundation money helped to finance programs on Japan produced by several public television stations (including WGBH of Boston and Nebraska Public TV). The foundation's most recent annual report shows that universities from Alabama to Texas Tech have accepted mon- ey from the foundation to support projects like an "Alabama-Japan Leadership Program" and a "Southwest program for Teaching about Japan for precollege educators." The foundation paid for a tour of Japan by black mayors from several U.S. cities. Some beneficiaries are literally as American as apple pie: In l988, the National Foundation of the Future Farmers of America received a grant "to support teacher training and curriculum development on Japanese agriculture."

With former presidents Jimmy Carter and Gerald Ford as "honorary advisers" and such political and entrepreneurial notables as Robert McNamara and former RCA chief Robert W. Sarnoff on its board of directors, the U.S.-Japan Foundation would appear to have firmly cemented its reputation among that stratum of respectable society which in Britain would be known as the "Great and the Good."

Yet the foundation's executives acknowledge that, in the past, they have had to persuade Japanese and U.S. scholars to accept its money, and admit that on occasion, they have gone to unusual lengths to distance themselves from their principal financial backer.

The reason for these defensive tactics lies in the controversial background of the Japanese businessman who is listed as the foundation's "founder" and in the origin of the large donation which served as the foundation's seed capital, and which, apart from investment income, is its only source of funds.

The "founder" of the U.S.-Japan Foundation, Ryoichi Sasakawa, is, in fact, at age 90, one of the few remaining members of a generation of Japanese ultra-nationalists who allegedly helped to goad their nation into World War II. And the seed money he provided to set up the foundation was part of the proceeds of one of Japan's largest gambling enterprises, founded and still supervised by Sasakawa under license from the Japanese government.

Much of the controversy that surrounds Sasakawa today in both Japan and Europe has its roots in his activities before and during World War II. These are described in some detail in the records of U.S. military authorities who occupied Japan after the war, and who interned Sasakawa without trial for three years as a suspected "Class A" war criminal. "Suspect {Sasakama} is clearly one of the worst offenders, outside the military in developing in Japan a policy of totalitarianism and aggression. He was active in the war and grew rich off ill-gotten gains," alleges one undated previously Top Secret memorandum prepared by lawyers for U.S. occupation forces in Japan. The document has since been declassifed and is now on file at the National Archives. Another document, originally classified Secret and dated 4 June 1947, summarized the results of the occupation forces' investigation: Sasakawa "appears to be a man potentially dangerous to Japan's political future. He has had long years as the leader of an extreme nationalist party. He may have suffered personal injustices from the Army, and in that sense be entitled to portray himself as a critic of the military, but in a larger and more important sense, he has been squarely behind Japanese military policies of aggression and anti-foreignism for more than 20 years.

"He is a man of wealth and not too scrupulous about its use. He chafes for continued power. He is not above wearing any new cloak that opportunism may offer," the document concluded.

American military records allege that Sasakawa and a right-wing party he formed were involved in pre-war assassination plots and that in 1940 he visited Germany and Italy to "investigate . . . battle line welfare." While in Italy, he was photographed with Mussolini who, according to Time magazine, he once called "the perfect fascist and dictator."

Sasakawa was never indicted, much less tried or convicted, on war crimes charges; records on file at the National Archives do not indicate precisely how or why American forces finally decided to release him from Tokyo's Sugamo prison, although one memorandum in his American dossier suggests that the facts that he visited Italy and Germany and headed a right-wing party did not necessarily justify prosecuting him as a war criminal. Through a spokesman, Sasakawa said last week, "I still doubt the justness of the military tribunal of the Far East where the victors took it upon themselves to judge the vanquished. On that premise, I do not wish to comment on my internment. However, it suffices to say, that I was released without being charged."

It was while in prison -- after an American guard gave him a copy of Life magazine containing a motorboat advertisement -- that Sasakawa got the idea which eventually would vault him into the major leagues of world philanthropy, according to a 1974 Time magazine account. Released from jail, he managed to persuade the new Japanese government to allow him to set up a circuit of speedboat races on which gambling would be legal. Sasakawa became the head of the racing federation, and also the head of a charity to which a portion of the gambling revenue is allocated, the Japan Shipbuilding Industry Foundation. A $44 million donation from this foundation, arranged by Sasakawa at the start of the '80s, constituted the seed money for the U.S.-Japan Foundation; due to wise investments and the rise in the value of the Japanese yen, the foundation's endowment has now grown to $85 million.

There have been allegations, such as one in a 1981 article in the Asian Wall Street Journal, that both Sasakawa and his motorboat racing federation are connected with the Yakuza, which is Japan's version of the Mafia. The Journal noted that Sasakawa is often called "Godfather Sasakawa" in the Japanese press. According to a confidential 1979 State Department memo cited in a 1983 Village Voice article by Alec Dubro and David Kaplan, "While {Sasakawa's} primary source of income -- the Japan Motorboat Racing Association -- is legalized gambling, many suspect that he is also intimately involved in the underworld activities of Japan's gangster clans -- the Yakuza." Through his spokesman, who works for the Japan Shipbuilding Industry Foundation, Sasakawa said, "I do not wish to comment on unfounded rumors."

The London Sunday Times also reported that Sasakawa was a close friend of Unification Church founder Sun Myung Moon. Citing a 1978 congressional investigation of U.S.-Korean relations, the newspaper said that Moon's followers had allied themselves with "powerful right-wing figures in Japan, such as Ryoichi Sasakawa." Through his spokesman Sasakawa now says, "I was once a guest at a commemoration held by Mr. Moon. I was in the company of former Prime Minister Nobusuke Kishi. This is the only contact I have had with Mr. Moon."

The controversies surrounding Sasakawa's political and gambling activities have caused some Japanese and Americans to shy away from taking his money. In 1980, the Foreign Correspondents Club of Japan politely rejected a $100,000 donation offered by Sasakawa to modernize the club's library, according to the Asian Wall Street Journal. London's Financial Times reported that the United Nations University of Tokyo also declined his donations.

Stephen W. Bosworth, the U.S.-Japan Foundation's current president and a former American ambassador to the Philippines, acknowledged: "He {Sasakawa} is regarded as a controversial figure by some people in Japan . . . . It would make people uncomfortable if he were trying to exercise any control over how the money is spent." Nonetheless, Sasakawa has managed to ingratiate himself with celebrities and political leaders around the world through his philanthropic activities. He has shared a table with British Prime Minister Margaret Thatcher at a banquet to honor a children's charity to which he gave 500,000 pounds; the directors of his English charity, the Sasakawa-Great Britain Foundation, have included former prime minister Harold Wilson, former foreign minister David Owen, a cousin of Queen Elizabeth II, and the publisher Robert Maxwell, according to London's Financial Times. And Angier Biddle Duke, former U.S. chief of protocol and scion of one of America's most aristocratic families, helped Sasakawa set up the U.S.-Japan Foundation and served as its first chairman, current foundation officials say.

William Eberle, the foundation's chairman and a former U.S. trade representative, whose Washington consulting firm now represents Nissan Motors, said that despite these blue-blood endorsements, some U.S. academics also initially expressed concern about the foundation's Sasakawa connection. Eberle, who said he has only met Sasakawa two or three times, said he made "a lot of serious inquiries" about whether the foundation was to operate independently of Sasakawa before he agreed to take its helm.

Eberle said that Sasakawa finances several other foundations, including a Sasakawa Peace Foundation in Japan, over which he maintains influence; in the case of the U.S.-Japan Foundation, however, the foundation makes all of its decisions independent of its founder, who holds no current position on the foundation's board or management.

Sasakawa's son, Yohei, is a member of the foundation's board, but Eberle said that his attendance at the twice-yearly trustees' meeting, at which grant applications are reviewed and approved, is sometimes irregular. Otherwise, according to Eberle, the foundation goes out of its way to keep its founder at arm's length: The U.S.-Japan Foundation has so far avoided hints by officials of some of the charities controlled directly by Sasakawa that they should engage in joint ventures. Once, when Sasakawa arrived at a meeting the foundation was holding in Tokyo, the organizers ignored heavy hints that their founder wanted to make a speech.

In his statement last week Sasakawa said that he had become involved in philanthropy in the United States because Americans helped generously with Japan's postwar reconstruction but that he was concerned about "a bumpy road ahead in the bilateral relationship.

"Based on the above perception, I established the U.S.-Japan Foundation 10 years ago." He said his contribution to the foundation has been one of "endowment," not of control. He told the Financial Times' Tokyo correspondent in 1985 that the reluctance of some potential beneficiaries to accept his donations was the fault of "left-wingers and communists who make propaganda saying that Sasakawa money is dirty money."

Jim Raphael, director of a Stanford University institute on East Asian studies, said that when the U.S.-Japan Foundation was first set up, he was nervous about it because of Sasakawa's involvement. Since then, however, he has concluded that the foundation is run quite independently of Sasakawa and that the foundation has a "very good track record."

But he added that Sasakawa's reputation still makes many Japanese nervous. "Mr. Sasakawa has a rather mixed reputation in Japan. Anyone who is trying to raise money from Japanese corporations would have to think carefully about accepting money from him because it might affect the prospects for other funding." The Institute of International Economics, a Washington think tank whose studies of U.S.-Japan trade relations have proved influential in Washington policy debates, has received substantial grants from the U.S.-Japan Foundation, and its deputy director, Tom Bayard, said that he has sometimes heard criticism of the foundation because of its ties to Sasakawa. But he said his institute is "not nervous about" the foundation because "we've looked very carefully into their independence. They operate as an American foundation does -- very independently."

Not all recipients of U.S.-Japan Foundation money know of Sasakawa's role, however. Bernie Staller, director of the National FFA Foundation in Madison, Wis., said he was "not aware" of Sasakawa's involvement in the foundation. "They have been around for a number of years. They are a respectable part of the philanthropic community," said Staller, explaining why his organization applied to the foundation for a grant.

The foundation's executives, and those recipients who do know about Sasakawa's background say that so long as the foundation's trustees and staff ensure that the founder has not attached strings to his money, there should be no reason why American beneficiaries should be nervous about the origin of the money. After all, said U.S.-Japan Foundation President Bosworth, "If you looked at the founders of other major foundations, you'll find they were not universally loved in their lifetimes."