The case also highlights the effect of Japan's demographic decline on private universities in particular, which are desperately seeking alternative sources of income simply in order to survive.

Futoshi Sano has denied the bribery charge after it was alleged he selected Tokyo Medical University for a government research subsidy in fiscal year 2017. Government subsidies are normally distributed on merit to universities which compete against each other for the funds.

Prosecutors believe this was in exchange for granting Sano’s son admission to the medical school. Sano’s son is currently “absent” from the school, according to a medical school official.

Tsukasa Daizen, director of the Research Institute for Higher Education, Hiroshima University, says the current application system “opens more possibilities of allowing favouritism” as the country’s declining demographics have led to universities vying for students.

“The higher education industry faces a severe economic crunch and survival depends on gaining public funds. This has led to a top-down approach with politicians and bureaucrats calling the shots on academia,” he said.

Mamoru Suzuki, president of Tokyo Medical University, and Masahiko Usui, the chair of the board of regents, handed in their resignations on 5 July in the wake of the allegations which led to the arrest of Sano on 4 July.

The Tokyo District Public Prosecutor’s Office special investigation squad last week released more information which they said pointed to the two asking Sano to help their institution to benefit from a government programme launched in 2016 to support university restructuring by promoting research that could become world-class projects.

There are also suspicions that university officials doctored Sano’s son’s university entrance exam to pave the way for his admission in February 2018. While there was no direct exchange of money related to bribe taking, prosecutors have linked the backdoor admission process closely to the university winning public funds.

They allege that Sano used his strong influence as director-general in the ministry and as head of the personnel and budget formulation section to select the medical university. In fiscal 2017, 188 universities applied but only 60 institutions, including Tokyo Medical University, were selected.

In 2017 the medical university was extended JPY35 million (US$311,000) for research into early cancer detection under a three-year research branding project after failing to be selected for the subsidy programme the previous year.

Research branding projects undertaken by private universities with a focus on science and technology are part of a major reform by the government – recipients receive between JPY20 million and JPY50 million (US$178,000-US$445,000) a year for five years.

A hallmark of Japan’s sweeping higher education reforms that began in 2004 was turning national universities into independent entities in order to reduce management costs and make institutions more competitive while improving Japan’s status internationally.

The reforms slashed public subsidies to national universities by an average of 10% overall annually. Instead, a range of three- to five-year grants were offered to support specific research programmes.

Critics blame a selection process based on recommendations made by a 10-member expert committee, with the ministry making the final decision.

Takamitsu Sawa, former president of the national Shiga University, says the selection of universities for research support is not accompanied by a transparent monitoring system.

“Replacing the former public subsidy system with short-term grants can only be successful if there is a monitoring system based on results rather than current dependence on committee opinions. Projects need to be checked annually,” he told University World News.

Prime Minister Shinzo Abe is currently facing heat over cronyism allegations for his suspected role in influencing bureaucrats to extend public funds for a new veterinary science university that is owned by a personal friend.