State-Journal.com - Japan office is a costly venture

Some expenditures to operate Kentucky's Japan trade office in recent years have included a $2,800 laptop for the director, one costing $2,700 for his liaison, a nearly $800 dinner and $200 hotel rooms, reports disclose.

That's in addition to director Jiro Hashimoto's annual salary of $202,000 and a part-time secretary's salary of $11,000, which account for almost half the annual operating expenses of more than $450,000, the records show.

Hashimoto, the only full-time employee, is one of the highest-paid state officials, earning far more than Gov. Steve Beshear's salary of $120,000.

The State Journal examined expense reports filed since 2004 that were provided by the Cabinet for Economic Development in response to an open-records request. Many of the expenses were approved under the administration of Gov. Ernie Fletcher, 2003-07.

Hashimoto has been the director of Kentucky's Far East Trade Office for 23 years and holds a bachelor's in international relations from Tokyo University.

He's employed by the cabinet on a two-year contractual basis and the most recent agreement included a 9 percent raise, increasing his salary from $185,000 to $202,000. The biennial budget approved earlier this year includes a 1 percent raise for state employees.

"He is well regarded by Japanese business executives, and his long-term dedication to Kentucky has enhanced our relationships with these businesses," said Mandy Lambert, spokesperson for the cabinet.
Beshear signed a biennial budget earlier this year that imposed a 3 percent cut to higher education and slashed millions of dollars from other agencies, such as human services and public defenders.

Since taking office, Beshear has emphasized the need for state agencies to make do with less funding.
"This is a budget in which state government and all of its organizations must prove that they can be better stewards of the taxpayers' hard-earned money," Beshear said during his budget speech.

Despite the tight budget situation, his spokesman Jay Blanton said it's still important to invest in economic development.

"Many states are making the same investment in economic development," Blanton said.

"They aren't backing off.In a global economy, and during a time of tremendous economic challenges, we can't afford to do so, either."

There are 155 Japanese companies located in Kentucky and they employ approximately 40,000. The trip to Japan has been a ritual for Kentucky governors for more than 30 years, and not without criticism and controversy.

Jim Waters, director of policy and communications at the Bluegrass Public Policy institute, has told The State Journal officials can do more at home to encourage economic growth by lowering taxes and reducing regulation.

"We will continue to lose jobs to other states not because we fail to go and convince them to come here but because our policies prevent companies from flourishing," Waters said.

Gov. Julian Carroll was one of the first to visit Japan and Gov. Paul Patton went eight times on economic development business. The price of airfare was $1,400 a ticket when Gov. Brereton Jones went to Japan in 1992. The delegates stayed in single and double rooms for between $300 and $400 per night.

Fletcher also incurred about $8,500 in travel expenses and luggage transportation fees when he traveled to Japan in 2004. He also spent $18,000 on a reception, $1,100 on airfare and $5,800 for other travel expenses during a 2006 visit.

Governors have also traveled to Europe on business that was touted as for economic development. Gov. Wallace Wilkinson was criticized for spending $84,000 (about $139,000 at today's value) on a trip to Europe at the end of his gubernatorial administration in 1991. Wallace and 12 other officials flew first-class and stayed at The Ritz in London, with a price tag of $1,100 per night.

Beshear continued the tradition of the Kentucky gubernatorial travel to Japan when he went with seven members of his administration to Tokyo in June and claimed more than $86,000 in expenses, including $30,000 for a reception and sightseeing stops for the first lady.

Other expenses include $13,500 for rooms at the Imperial Hotel in Tokyo and $9,000 at the hotel's limousine service.

After returning to Kentucky, Beshear said he expected two Japanese companies to invest in Kentucky in the next few weeks although he did not name the firms.

The biennial operating budget for the Kentucky's Far East Trade office during the 2008-2009 and 2009-2010 fiscal years totals $914,000, including $96,000 for rent each year, $6,000 for office equipment, $12,000 for office supplies, $16,000 for postage, $60,000 for promotions, $34,000 for travel, $800 for legal fees and $19,000 for miscellaneous expenses.

Transportation expenses include $6,000 for Hashimoto's domestic travel arrangements, $6,000 for Hashimoto to travel to Kentucky and $15,000 for travel arrangements for when the governor and other officials visit Japan.
According to expense reports filed by between 2004 and 2008, Hashimoto travels once or twice a month to industrial cities in Japan to visit with clients. The trips last between one and three days, with an average cost of $500 to $1,000 for hotels, meals, and transportation.

Hashimoto also visits Kentucky several times a year, with airfare averaging around $7,000 and other expenses about $4,000, including hotels, meals and phone calls.

He frequently stays at the Hilton Suites in Lexington at $100 per night, the Capital Plaza in Frankfort for $80 per night or the Seelbach Hotel in Louisville at $200 per night.

According to records filed during the last five years, Hashimoto also rents a cell phone while traveling in Kentucky and charges between $250 and $400 for calls during a seven-day period.

While in Kentucky, Hashimoto entertains clients at the Asiatique restaurant in Bardstown or Tachibana in Lexington. A five-course meal at Asiatique can cost up to $45 per person. One bill at Tachibana topped $780, but it was unclear how many clients attended the dinner or what was purchased.
Lambert said it's helpful for Hashimoto to visit with Japanese companies locating in Kentucky for the first time. He also visits with existing clients when he travels in Kentucky.

"Up to that point, he might have been their only contact with Kentucky, and he can help with translation of both language and business customs with which the client may not be familiar," she said.
In April 2008 Hashimoto has also used the equipment expense account to purchase a $2,700 laptop for his liaison in Nagoya, one of Japan's major ports. Hashimoto received a new laptop in June 2004 with accessories and extra memory and leased a new desktop computer in February 2008.

Some specific details of the expense reports were not available because the receipts were printed in Japanese and Assistant General Counsel Catherine Staib said the cabinet was unable to provide a translation.

According to the contract, Hashimoto's duties include establishing and maintaining contact with industrial investment prospects, promoting Kentucky as a business location, providing state officials with information on Asian markets, developing promotional materials, conducting research and organizing trade missions.

In addition to increasing Hashimoto's annual salary, the current agreement also reduced expenses for other staff. In 2007, the trade office's operating budget included $39,500 for an administrative assistant and $900 for a temporary secretary.

The administrative position was eliminated but the secretary received a $10,000 pay increase and Hashimoto received a $17,000 increase.

The cost of living in Japan is one of the highest in the world, according to the U.S. Department of State. Travel is exceptionally expensive " bus tickets can cost $25 or more and taxi fare can be hundreds of dollars for a single trip, according to a travel advisory.

Staib said Hashimoto receives a verbal annual evaluation from J.R. Wilhoite, commissioner of new business development. Staib said no other written documents were available, but according to comments attached to the two-year contract, his evaluations have been positive.

"Mr. Hashimoto's performance has been excellent, and he has pertinent business experience and education," according to the comments.

It's also stated in the contract, it "remains impractical to consider in-house methods or a state employee" for the position.

"The requirements and logistics dictate a qualified native in Japan perform the job," according to the contract. "The individual's experience and ongoing projects qualify Mr. Hashimoto."