5/23/2016

Analysis: Japan tries, again, to cut corporate ties to yakuza | Reuters

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Analysis: Japan tries, again, to cut corporate ties to

yakuza
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PeoplearereflectedonastockquotationboardoutsideabrokerageinTokyo,August11,2010.

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AkiTsurumakisaysheneverfelthislifewasindangerduringthe15yearshehasbeen
helpingcompaniesescapeentanglementswithJapan's"yakuza"crimesyndicates.
Butthe42yearoldlawyerjokesthathedoesnottakeanychances,addingwithasmile,"I
neverstandneartheedgeofthetrainplatform."
Thedarkandsometimesdangeroustriadoftiesamonggangsters,businessesand
politicianshasalongtraditioninJapan,whichhelpsexplainwhyascandalengulfing
Japan'sOlympusCorphasstirredupmediaandmarkettalkofpossibleyakuzalinks,
despitecompanydenialsandalackofevidence.
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OustedOlympusCEOMichaelWoodfordhastoldReutershewillnotreturntoJapanto
meetinvestigatorsdueto"securityissues,"althoughhedeclinestospellouthisfears.And
Facta,aJapanesemagazinethatbroketheOlympusstory,saysaCaymanIslandsfirm
http://www.reuters.com/article/us-japan-yakuza-idUSTRE7A726F20111108

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Analysis: Japan tries, again, to cut corporate ties to yakuza | Reuters

linkedtosomeOlympusdealshadindirecttiesto"antisocialforces"acommon
euphemismfororganisedcrime.
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OlympusPresidentTsuyoshiTakayama,whotookoverlastmonth,revealedonTuesday
thatthecompanyhadhiddenlossesfortwodecades,usingaseriesofunusualM&Adeals
inthepastfiveyears.
Asfor"antisocialforces,"Takayamahastoldreportersheisunawareof"anysuchthing."
Butitisnotthefirsttimethatacorporateorfinancialcontroversyhasgivenriseto
speculationofyakuzainvolvement.
"Ithinkit'saverysadindictmentofcorporateJapanthatthat'stheworkingassumption,"
saidPeterGodwin,managingpartneratlawfirmHerbertSmithinTokyo,whenaskedwhy
thecorporatecontroversiesoftenstirtalkaboutyakuza.

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"IcanonlyassumethatJapanesepeoplethinktheyakuzaaresointrinsicallypartofthe
fabricofcorporateJapanthatit'sarealisticpossibilityandit'stheirfirstthought."
Japaneseauthoritieshavebeenopiningaboutadvancesbyorganisedcrimeintofinancial
marketsandcorporateboardroomsformorethantwodecades,asyakuzahavebranched
outintolegitimateventureswithwhichreputablefirmsthendobusiness.
InscandalsthatrockedJapan'sfinancialsectorin1991,topexecutivesofNomura
SecuritiesandNikkoSecuritiesquitafterrevelationsthataffiliateshadhaddealingswith
organisedcrime,andthatthebrokerageshadcompensatedfavoredclientsforlosses.

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Tiesbetweenyakuzaandfinancialfirmsagaingrabbedattentioninthemid1990swhen

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thegovernmentbudgetedfundstohelpwindupfailedmortgagefirms.Governmentofficials
saidaheftychunkofthesefirms'badloansinvolvedorganisedcrimemoney.
Twoyearsago,FujitsuLtdfireditspresidentforallegedlinkstoorganisedcrime,an
allegationhedeniesandonethathaspromptedhimtotakecourtactiontoclearhisname.
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Changes,however,mightbeafoot.
Arecentcrackdownthattargetsnotjustgangstersbutthecompaniesthatdobusinesswith
themcould,ifstrictlyenforced,makealreadywarymanagersthinkevenharderaboutthe
dangersofdoingdealswithyakuzaortheirfrontcompanies.
"Theriskofdoingbusinesswithorganisedcrimehasgottenmassivelylarger,"said
NicholasSmith,headofJapaneseequitiesstrategyatCLSAinTokyo.Thenewlawsare

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crimesyndicateswentintoeffectinTokyoandOkinawaprefectureslastmonth,thelastina
seriesofsimilarlawsacrossJapan.

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yearsagothataimedtochokeoffquasilegalandlegitimatesourcesoffundingby
organisedcrimesyndicates,saidMorioUmeda,aformerpolicemanwhohelpsrunananti

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yakuzaadvicecenterinTokyo.
FirmsbreakingtheTokyoordinancewillgetawarning,thenhavetheirnamesmadepublic
iftheypersist,astepthatcouldharmtheirbrandandprovemuchmorecostlythanamere
fine.Repeatoffendersfacefinesofupto500,000yen($6,400),andcompanyofficialscan
facejailtermsofuptoayear.
"Companiesneedtorealizeitwillbeaworseblowtotheirreputationiftheyarefoundtobe
dealingwithyakuzathanifanexecutiveisfounddoingsomethingwrong,"Umedasaid.
Acommonpatternofyakuzainvolvementinthepasthasinvolvedfirmspayinghush
moneytogangstersorbeingsuckedintoshadydealsinexchangeforyakuzasilenceabout
misdeeds.
http://www.reuters.com/article/us-japan-yakuza-idUSTRE7A726F20111108

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Umedaandotherssaidhidingcorporatemisdeedshadgottenharderasemployees'
undyingloyaltyfadedwiththebreakdownofJapan'slifetimeemploymentsystem.

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constructionandtransporttomakeiteasierforfirmstocuttieswithgangstersbyinserting

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organisedcrimeexclusionclausesincontracts.
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ofsuchgroupscanthenbechargedwithfraudiftheirmembershipbecomesknown.
"Amoodagainstorganisedcrimethathasnotbeenseenbeforehasspreadthroughout
society,"formerNationalPoliceAgency(NPA)chiefTakaharuAndowasquotedby
JapanesemediaastellinganewsconferencebeforesteppingdowninOctober.
"Ithinkthisenergywillgrow,"addedAndo,whomanysaywasadrivingforcebehindthe
recentpush.
Justhowmuchimpactthelateststepswillhaveremainstobeseen,giventhecrime
syndicates'longhistory,theirabilitytoadapttochangingtimesandalingeringviewof
gangstersnotonlyasanecessaryevilbutasupholdersoftraditionalvaluesanddefenders
oftheweak.
"Itwouldneedsomeincrediblyferociousenforcement...tochangethingsinahurryandI
don'tdetectthatthereisarealappetiteforit,"saidGodwinoflawfirmHerbertSmith.
FROMGAMBLINGTODEBTCOLLECTION
Smalltimeyakuzafamilies,whoseoriginsstretchedbacktofeudalerapeddlersand
gamblers,mergedintogiantsyndicatesafterJapan'sdevastatingdefeatinWorldWarTwo,
achaoticperiodwhenpoliceandpoliticiansweremorethanwillingtosubcontractpeace
keepingandothertaskstogangsters.
WhenshareandpropertypricessoaredduringJapan'slate1980sbubbleeconomy,crime
syndicatesdiversifiedfromtraditionalendeavorssuchasdrugs,prostitutionandextortion
intofinancialandrealestatemarkets.Whenthebubbleburstin1990,theyfoundnew
nichessuchasbaddebtcollection.
A1992lawgavepolicepowertodesignategangstergroupsasorganisedcrimesyndicates
andclampdownon"greyzone"activitiessuchasstrongarmdebtcollection.
Butitalsodroveyakuzatosetupfrontcompaniesthroughwhichtheyexpandedlegitimate
andquasilegitimatedealingsinsectorssuchasfinance,realestateandwastedisposal.
"Afterthe1992law,gangsterscouldnolongerputuptheirlogosattheirofficesormake
businesscardswiththelogos,"saidaTokyoMetropolitanGovernmentofficial.
"Sotheycreatedfrontcompanies...andbecameinvolvedinordinaryeconomicactivities
withcompaniesandcitizens."
A2010reportbytheNPA,theNationalPolicyAgency,saidcompanieswereofteninthe
darkaboutpossibledealingswithcrimesyndicates.
"Ascrimesyndicateshavebecomeverysophisticatedinmakingtheiractivitiestoacquire
illicitfundsopaqueinrecentyears,itisquitepossiblethatordinarycompaniesunknowingly
conducteconomictransactionswiththem,totallyunawarethatcounterpartiesof
transactionsarecrimesyndicatelinkedenterprises,"thereportsaid.
Thenewcrackdowncouldmakeidentifyingsyndicatelinkedbusinessesevenharder,
pushingtheireconomicactivitiesfurtherintotheshadows,expertssaid.
"Theygetinvolvedwherevermoneyisonthemoveinagivenera,"lawyerTsurumakisaid.
"Sothislawmaynotbetheultimateweaponthatbringsthemtoanend.
Authoritiesstillstopshortofoutlawingcrimesyndicatesthemselves,suggesting,criticssay,
http://www.reuters.com/article/us-japan-yakuza-idUSTRE7A726F20111108

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Analysis: Japan tries, again, to cut corporate ties to yakuza | Reuters

acertainambivalenceaboutwipingoutyakuzagroupsaltogether.
The2010NPAreportlisted22designatedcrimesyndicates,completewiththeirlogosand
addressesoftheirheadquarters.Fulland"associate"memberstotaled80,900,downfrom
88,600in1990.AlmosthalfweremembersoftheYamaguchigumi,which,whilebasedin
Kobe,westernJapan,hasspreaditsinfluencetothecapitalinrecentyears.
"Organisedcrimegroupsinsisttheyarehumanitarianorganizationsandunderthe
Japaneseconstitutionhavearighttoexist,thattheypromotetraditionalvaluesandhelp
dealwithstreetcrime,(and)helpsocietyintimesofneed,"saidJakeAdelstein,an
AmericanjournalistandauthorworkinginJapan.
"AlotofJapanesepeople,especiallythepolice,feelthatit'sbettertohavethemexist
quasilegitimatelysothatyoucanregulatethemandkeepaneyeonthem,"added
Adelstein,whospent12yearscoveringcrimeattheYomiurinewspaper.
AfterthemassiveMarch11earthquakeandtsunamithatdevastatednortheastJapan,
yakuzawereamongthefirsttosendtruckloadsofreliefgoodstovictims,ayakuzaboss
wasquotedassayingatthetimeintheWeeklyTaishuumagazine,whichspecializesin
yakuzaaffairs.
However,cynicssaidtheywerealsotryingtogetanearlyfootinthedoortogetcontracts
formassivecleanupandrebuildingprojects.
Playingontradition,theheadofthegiantYamaguchigumisyndicatewarnedinSeptember
thattryingtoeradicatehisgroupcouldhavedireresultsforordinarycitizens.
"IftheYamaguchigumiweretodissolvenow,publicsafetywouldbecomemuchworse,"
crimebossKenichiShinoda,whogoesbythealiasShinobuTsukasa,saidinaninterview
withtheSankeinewspaperinSeptember,arguingthathisgroupprovidesaplaceforthose
whofallthroughsociety'scracks.
Bymakinglifetougherforcrimesyndicatemembers,recentmovescouldencourageknown
groupstohidetheirorganizations,complicatingpoliceeffortstocontrolthem,saidKensuke
Nishioka,afreelancejournalistwhowritesaboutyakuza.
"Thecrimesyndicatesmightofficiallydissolveandgounderground,becominglikethe
Mafia,"Nishiokasaid.
"Thepolicearejustmakingitharderforthemselves."
(EditingbyMarkBendeich)

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