Aki Tsurumaki says he never felt his life was in danger during the 15 years he has been helping companies escape entanglements with Japan’s “yakuza” crime syndicates.
But the 42-year-old lawyer jokes that he does not take any chances, adding with a smile, “I never stand near the edge of the train platform.”
The dark and sometimes dangerous triad of ties among gangsters, businesses and politicians has a long tradition in Japan, which helps explain why a scandal engulfing Japan’s Olympus Corp has stirred up media and market talk of possible yakuza links, despite company denials and a lack of evidence.
Ousted Olympus CEO Michael Woodford has told Reuters he will not return to Japan to meet investigators due to “security issues”, although he declines to spell out his fears. And Facta, a Japanese magazine that broke the Olympus story, says a Cayman Islands firm linked to some Olympus deals had indirect ties to “anti-social forces” — a common euphemism for organized crime.
Olympus President Tsuyoshi Takayama, who took over last month, revealed on Tuesday that the company had hidden losses for two decades, using a series of unusual M&A deals in the past five years.
As for “anti-social forces,” Takayama has told reporters he is unaware of “any such thing.”
But it is not the first time that a corporate or financial controversy has given rise to speculation of yakuza involvement.
“I think it’s a very sad indictment of corporate Japan that that’s the working assumption,” said Peter Godwin, managing partner at law firm Herbert Smith in Tokyo, when asked why the corporate controversies often stir talk about yakuza.
“I can only assume that Japanese people think the yakuza are so intrinsically part of the fabric of corporate Japan that it’s a realistic possibility and it’s their first thought.”
Japanese authorities have been opining about advances by organized crime into financial markets and corporate boardrooms for more than two decades, as yakuza have branched out into legitimate ventures with which reputable firms then do business.
In scandals that rocked Japan’s financial sector in 1991, top executives of Nomura Securities and Nikko Securities quit after revelations that affiliates had had dealings with organized crime, and that the brokerages had compensated favored clients for losses.
Ties between yakuza and financial firms again grabbed attention in the mid-1990s when the government budgeted funds to help wind up failed mortgage firms. Government officials said a hefty chunk of these firms’ bad loans involved organized crime money.
Two years ago, Fujitsu Ltd fired its president for alleged links to organized crime, an allegation he denies and one that has prompted him to take court action to clear his name.
Changes, however, might be afoot. A recent crackdown that targets not just gangsters but the companies that do business with them could, if strictly enforced, make already-wary managers think even harder about the dangers of doing deals with yakuza or their front companies.
“The risk of doing business with organized crime has gotten massively larger,” said Nicholas Smith, head of Japanese equities strategy at CLSA in Tokyo. The new laws are “extremely powerful and likely to produce big changes.”
Ordinances that outlaw business dealings with yakuza and those who have close ties to crime syndicates went into effect in Tokyo and Okinawa prefectures last month, the last in a series of similar laws across Japan.
The push by local governments stemmed from a central government directive issued four years ago that aimed to choke off quasi-legal and legitimate sources of funding by organized crime syndicates, said Morio Umeda, a former policeman who helps run an anti-yakuza advice centre in Tokyo.
Firms breaking the Tokyo ordinance will get a warning, then have their names made public if they persist, a step that could harm their brand and prove much more costly than a mere fine. Repeat offenders face fines of up to 500,000 yen ($6,400), and company officials can face jail terms of up to a year.
“Companies need to realize it will be a worse blow to their reputation if they are found to be dealing with yakuza than if an executive is found doing something wrong,” Umeda said.
A common pattern of yakuza involvement in the past has involved firms paying hush money to gangsters or being sucked into shady deals in exchange for yakuza silence about misdeeds.
Umeda and others said hiding corporate misdeeds had gotten harder as employees’ undying loyalty faded with the breakdown of Japan’s lifetime employment system.
“This is an era of whistle blowers,” he said.
The local laws coincide with efforts by industries from banking and insurance to construction and transport to make it easier for firms to cut ties with gangsters by inserting organized crime exclusion clauses in contracts.
Crime syndicate members who sign off on contracts while affirming they are not members of such groups can then be charged with fraud if their membership becomes known.
“A mood against organized crime that has not been seen before has spread throughout society,” former National Police Agency (NPA) chief Takaharu Ando was quoted by Japanese media as telling a news conference before stepping down in October.
“I think this energy will grow,” added Ando, who many say was a driving force behind the recent push.
Just how much impact the latest steps will have remains to be seen, given the crime syndicates’ long history, their ability to adapt to changing times and a lingering view of gangsters not only as a necessary evil but as upholders of traditional values and defenders of the weak.
“It would need some incredibly ferocious enforcement … to change things in a hurry and I don’t detect that there is a real appetite for it,” said Godwin of law firm Herbert Smith.
FROM GAMBLING TO DEBT COLLECTION
Small-time yakuza families, whose origins stretched back to feudal era peddlers and gamblers, merged into giant syndicates after Japan’s devastating defeat in World War Two, a chaotic period when police and politicians were more than willing to subcontract peace-keeping and other tasks to gangsters.
When share and property prices soared during Japan’s late 1980s bubble economy, crime syndicates diversified from traditional endeavors such as drugs, prostitution and extortion into financial and real estate markets. When the bubble burst in 1990, they found new niches such as bad debt collection.
A 1992 law gave police power to designate gangster groups as organized crime syndicates and clamp down on “grey zone” activities such as strong-arm debt collection.
But it also drove yakuza to set up front companies through which they expanded legitimate and quasi-legitimate dealings in sectors such as finance, real estate and waste disposal.
“After the 1992 law, gangsters could no longer put up their logos at their offices or make business cards with the logos,” said a Tokyo Metropolitan Government official.
“So they created front companies … and became involved in ordinary economic activities with companies and citizens.”
A 2010 report by the NPA, the National Policy Agency, said companies were often in the dark about possible dealings with crime syndicates.
“As crime syndicates have become very sophisticated in making their activities to acquire illicit funds opaque in recent years, it is quite possible that ordinary companies unknowingly conduct economic transactions with them, totally unaware that counterparties of transactions are crime syndicate-linked enterprises,” the report said.
The new crackdown could make identifying syndicate-linked businesses even harder, pushing their economic activities further into the shadows, experts said.
“They get involved wherever money is on the move in a given era,” lawyer Tsurumaki said. “So this law may not be the ultimate weapon that brings them to an end.
Authorities still stop short of outlawing crime syndicates themselves, suggesting, critics say, a certain ambivalence about wiping out yakuza groups altogether.
The 2010 NPA report listed 22 designated crime syndicates, complete with their logos and addresses of their headquarters. Full and “associate” members totaled 80,900, down from 88,600 in 1990. Almost half were members of the Yamaguchi-gumi, which, while based in Kobe, western Japan, has spread its influence to the capital in recent years.
“Organized crime groups insist they are humanitarian organizations and under the Japanese constitution have a right to exist, that they promote traditional values and help deal with street crime, (and) help society in times of need,” said Jake Adelstein, an American journalist and author working in Japan.
“A lot of Japanese people, especially the police, feel that it’s better to have them exist quasi-legitimately so that you can regulate them and keep an eye on them,” added Adelstein, who spent 12 years covering crime at the Yomiuri newspaper.
After the massive March 11 earthquake and tsunami that devastated northeast Japan, yakuza were among the first to send truckloads of relief goods to victims, a yakuza boss was quoted as saying at the time in the Weekly Taishuu magazine, which specializes in yakuza affairs.
However, cynics said they were also trying to get an early foot in the door to get contracts for massive cleanup and rebuilding projects.
Playing on tradition, the head of the giant Yamaguchi-gumi syndicate warned in September that trying to eradicate his group could have dire results for ordinary citizens.
“If the Yamaguchi-gumi were to dissolve now, public safety would become much worse,” crime boss Kenichi Shinoda, who goes by the alias Shinobu Tsukasa, said in an interview with the Sankei newspaper in September, arguing that his group provides a place for those who fall through society’s cracks.
By making life tougher for crime syndicate members, recent moves could encourage known groups to hide their organizations, complicating police efforts to control them, said Kensuke Nishioka, a freelance journalist who writes about yakuza.
“The crime syndicates might officially dissolve and go underground, becoming like the Mafia,” Nishioka said. “The police are just making it harder for themselves.”
(Editing by Mark Bendeich)
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