Feature Articles

July 2012
Japanese Racketeers

      By Mike La Sorte, Professor Emeritus

Mike La Sorte is a professor emeritus (SUNY) and writes extensively on a variety of subjects.

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"In the Japanese system, corporate extortion by Sokaiya-literally 'general meeting operators'-takes several forms. A Sokaiya typically is defined as a nominal shareholder who either attempts to extort money from a company by threatening to disrupt its annual shareholders' meeting or works for a company to suppress opposition at a meeting. Surprisingly, Japanese executives pay Sokaiya despite the fact that payment can result in civil or criminal liability not only for Sokaiya, but for the executive as well." (M. West, "Information, Institutions, and Extortion in Japan and the United States," Northwestern University Law Review, Vol. 93, No. 3, 1999)

     Yakuza racketeers see themselves as actors. It is an atmosphere, a presentation of self. One should think of himself as being watched, being on stage all the time. It is a performance. If you are bad at playing the role of Yakuza, then you are a bad Yakuza.

     In Japan after the Second World War, organized-crime groups established black markets and became skilled at dealing with the American occupation forces. As the nation rebuilt, the Yakuza clans got involved in real estate and public-works projects. They also excel at loan sharking, blackmail and devise creative ways to terrorize banks. Yakuza also claim that they engage in good works. They go after deadbeats who do not repay loans, help people solve problems with the expense of lawyers, and engage in charity work, especially after earthquakes and other disasters.

     The Yakuza phenomenon has been called a model of racketeering. Much of Yakuza wealth derives from corporate and white-collar interests, such as hedge funds and takeovers. The culture of corruption has deep roots in Japan. Village patronage is commonplace and powerful alliances are found among crime bosses, corporate chairmen, leading politicians and other notables. The uncovering of crimes among political elites is frequent; political influence is business as usual.

     The unholy triangle of business, politics and the underworld in Japan is centered on bribery. In the United States, bribery has always been considered morally wrong. A strong anti-bribery ethic provides the promise of punishment and public humiliation for those who offer or take bribes. In Japan, by contrast, bribery is an everyday affair. The bribed politician may be shamed when publicly exposed but will not feel a sense of moral guilt. It is the way business is conducted. Despite convictions for bribery, political careers can still flourish.

     Yakuza do not like to be compared to the America mafia. "We are not the mafia." Mafiosi, in the Yakuza view, are ordinary criminals who commit crimes for money and who will sell their services to the highest bidder. But not the Yakuza. "We have the tradition of helping the society."

     The Yakuza tradition contains a conduct code that specifies being brave at all times and sacrificing oneself for others. Mafia is self-centered; Yakuza is not. Much value is placed on duty and loyalty. Honor and obligation are rock-bound commandments, praised highly by the Japanese.

     There has been, it is claimed, erosion over time of traditional behavior since the emergence of modern Japan. In the post-World War Two era, Japan began to accumulate vast wealth. The result has been a new breed of mobsters whose sole interest is monetary gain. The old Yakuza has been replaced by suave, educated white-collar racketeers, who view violence as counter-productive. Intimidation is the way of crude, untutored thugs whose intellectual skills are minimal. For the modern racketeer, imagination, shrewdness, manipulation and salesmanship are the tools of preference for separating a man from his money.

     Here is an example of a modern Yakuza operation: money lenders who use loans as an effective business take-over wedge.

     An Iraqi businessman opened an upscale Iraqi restaurant in Tokyo. It cost him two to three million dollars to get underway plus a Japanese bank loan of two million dollars for the lease. Business turned out to be poor and the cost of operating the establishment was higher than expected. The owner was unaware that the food vendors were friends of the Japanese floor manager. They were acting in collusion to rob their employer by doubling the going price for produce.

     The owner soon found himself in need of an additional million yen to pay his staff and meet his back payments. He contacted through an intermediary a Tokyo loanshark who offered the Iraqi a loan of 30 million yen for thirty days if the owner would agree to put up his restaurant as security. Confident that an associate in the Middle East would come through with the money before the thirty-day deadline, the restaurateur took the deal.

     Once the necessary documents were signed, the loanshark brought in thirty stacks of a hundred new 10,000 yen notes. The shark took thirteen million yen as his commission and gave the intermediary a finder's fee of three million yen. That left the Iraqi with 24 million from which he paid his bills.

     Unfortunately, the 30 million did not arrive from the Middle East until after the agreed upon 30-day limit. The money lender now became the restaurant's putative owner. When the Iraqi sought to enter the establishment, he was met by several young Yakuza barring the entrance to discourage him from claiming that which was no longer his.

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