Japan, which may not be the perfect economic juggernaut after all, lately has grown accustomed to losing face.
There was the bribery scandal that led to the resignation of its prime minister two years ago.
This year's embarrassment, coming in the midst of a three-month decline in the Tokyo stock market, was the resignation of key securities industry executives due to improper reimbursement of big clients for losses in last year's market collapse.
Surprisingly, such revelations may not be bad for either Japan or for would-be investors in stocks of Japanese companies.
Japan is a nation known for cozy insiders in government and financial dealings.
Hopefully, the Japanese stock market gradually will become a fairer one, in which knowing the right people matters less than making the right decisions.
At the same time, there may be some good buys in the downtrodden stocks of Japanese companies. They took a hit in the flurry of negative publicity, though they revived after the Bank of Japan cut its discount rate from 6 percent to 5.5 percent.
"For the next month or two there will be a buying opportunity in the Japanese market, and, as the Bank of Japan continues to lower rates in recognition of a weakening economy, stock prices nTC will rise," said Geoff Ho, London portfolio manager of John Hancock World-Pacific Basin Equity Fund, up 17.23 percent this year.
Because Japan's central bank was agonizingly slow to cut rates, rate-sensitive stocks of Japanese banks, insurance companies and brokerage firms have performed poorly in 1991.
So portfolio managers of the top funds have instead emphasized export electronics and smaller companies.
"I expect a severe slowdown in the Japanese economy, followed by further rate declines and a revival of certain parts of the market," predicted Christian Wignall, portfolio manager for GT Pacific Growth Fund, up 16.37 percent this year.
Paul Parsons, London portfolio manager of Financial Strategic Pacific Basin Portfolio, up 16.92 percent this year, believes the Nikkei average could post significant gains.
"Stocks are looking cheaper and more attractive again, so we're accumulating even though there may be scandal and political intrigue along the way to greater heights," said Parsons.
There's an overriding belief that an improving U.S. economy will provide a stronger market for Japanese exports. So Casio Computer Co., maker of lower-priced consumer products, is in the portfolio of all three managers. Both Wignall and Parsons hold Sony Corp. as well.
Top stock funds in 1991 that include a significant portion of their portfolios in Japanese companies, according to the Mutual Fund Values investment advisory, are:
John Hancock World-Pacific Basin Equity Fund, John Hancock Advisers, Boston, up 17.23 percent.
Financial Strategic Pacific Basin Portfolio, Invesco Funds, Denver, up 16.92 percent.
Nomura Pacific Basin Fund, Nomura Capital Management, New York, up 16.67 percent.
GT Pacific Growth Fund, GT Capital Management, San Francisco, up 16.37 percent.