Traditional studies of the Japanese bureaucracy have emphasized effective governance through a close government–business nexus. Yet this network relation creates corruption, especially at a high level of administration. Adopting an organizational network approach, this article provides a critical analysis of the causality between network structures and administrative corruption. Examining financial and public works policies, this article finds that amakudari- and zoku-driven network relationships, which have been reinforced by sociocultural bases, are vertically and exclusively structured and substantiate corruption in administration. Policy making on the basis of such network relations not only results in mismanagement in administration and the distortion of the market disciplines but also delegitimizes the governance system by destroying public trust in government. This article suggests that bringing greater heterogeneity and citizen participation to administration through diversity management and e-government would reduce administrative corruption in Japanese governance.