A key figure in the spreading scandal involving alleged payoffs made or promised to promote sales of American warplanes plunged to his death from his office in central Tokyo today.
Mitsuhiro Shimada, 56, executive director of Japan's sixth-largest trading firm, Nissho-Iwai Co., apparently committed suicide because of mental strain over disclosures of his role in an arrangement to sell Grumman Corp. planes to Japan.
His body was found this morning on a street in the Akasaka section of Tokyo and his will and a suicide note were later discovered in his seventh-floor office.
The prominent Japanese businessman had been questioned intensively in recent days by prosecutors seeking to unravel suspicions that illegal payoffs may have been made or promised to induce the government bo buy a number of E2C early-warning air defense planes from Grumman International.
Grumman has denied that any bribes were paid to Japanese officials.
The case has become a major political issue here, in part because of the surface similarities between it and the Lockheed scandal that resulted in the indictment of former prime minister Kakuei Tanaka.
Prime Minister Masayoshi Ohira has promised a full investigation of the case. Special prosecutors are now in the United States examining documents related to a report by the Securities and Exchange Commission. That report touched off the official investigation and prompted intensive coverage by Japanese newspapers.
Nissho-Iwai had been for several years Grumman's agent in Japan, attempting to persuade the government to purchase several of the E2C airborne alert planes. At one point, Tokyo had been considering domestic production of similar aircraft but subsequently decided to buy Grumman's version.
Ohira recently said the government will order four of the planes, despite the growing scandal and pressures from opposition members of parliament.
Shimada had been a central figure in the latest reports that his company had once had a secret contract with an American consultant which promised to reward the consultant if the sales campaign of Grumman and Nissho-iwai was successful.
The contract, the company said, was with Harry Kern, an American journalist, foreign editor of Newsweek magazine in the early 1950s, and a friend of several once-prominent Japanese politicians, including former prime minister Nobusuke Kishi.
Nissho-Iwai officials have disclosed recently that Kern was to be paid 40 percent of the commission that the firm would receive from Grumman if the sales were made. The contract, or memorandum of understanding, was signed in 1969 and terminated in 1976. The sales of the first planes were not made until the understanding had been terminated.
Nissho-Iwai had denied to reporters several times that any such agreement existed with Kern, who now lives in New York and publishes a newsletter on foreign affairs.
Last week, however, Shimada appeared at a news conference with his boss, Nissho-Iwai President Mitsuo Ueda, to disclose that such a contract had in fact been signed in 1969. It was signed by Kern and Nissho-Iwai Vice President Hachiro Kaifu, a close associate of Shimada, the company said.
Shimada had been questioned for several hours on six occasions by prosecutors and was scheduled to testify later this month before committees of the Japanses Diet, or parliament, that have opened their own investigations.
[Kern, who is out of country, could not be reached for comment. His son, Nathaniel Kern, who works with his father, was reached in Washington and said "we have stopped making any comments" on certain aspects of the investigation until their lawyers have a chance to go over the facts.]
[However, he said, "We have facts in our possession that refute" information supplied to the SEC by Grumman and upon which many of the allegations in the Japanese press have been based.]
[He would not comment on whether Harry Kern had been a consultant for Nissho-Iwai but said a Grumman report to the SEC did not name Kern or allege that commissions had been paid.]
The story surfaced when the SEC produced a report on alleged foreign payoffs by American companies. That report does not contain any specific allegations but notes that in 1969 Grumman had switched its Japanese agent in its sales campaign to sell E2C Hawkeye warning planes, which cost about $30 million, including spare parts.
The report said that the change of agents was made "at the suggestion of a Japanese government official." That remark raised questions here of which official had suggested that Nissho-Iwai be hired and why.
The report added: "In 1975, Grumman International personnel learned of the possibility that the sales representative [Nissho-Iwai] might pay a portion of its commission ot an American retained by Grumman International as a consultant in Japan and that the consultant might in turn pay a portion of his commission to one or more Japanese officials."
The consultant, it was later reported, was Kern. In interviews with Japanese newspapers and wire servcies he has denied passing on any part of commissions to any Japanese officials. Kern, who is 67, is a Harvard University graduate who joined Newsweek as a reporter, became an editor of the magazine's World War II coverage, AND CAME TO Japan after the war, according to reports in a Tokyo newspaper, the Mainichi Shimbun.
Kern was described as being friends with Kishi, the former prime minister. In 1963 he was awarded Japan's Third Order of the Sacred Treasure.
Grumman Corp. officials have said here in a news release that neither the company nor any of its subsidiaries has paid any bribes or illegal payoffs to any Japanese officials. It also noted the SEC report does not imply that any such payoffs occurred.
Eager to implicate present or past officials of the ruling Liberal Democratic Party, opposition party leaders have kept up a running criticism of the E2C affair and have dispatched their own investigators to the United States to try to obtain more documentation.
The Justice Ministry has reached an agreement with the U.S. Justice Department to obtain material that is believed to be still in the possession of the SEC. Investigators arrived in Washington this week.