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YAKUZA.
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Effects of Japan's organized crime syndicate on economy, business, society, people & govt.... More...
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Paper Abstract:
Effects of Japan's organized crime syndicate on economy, business, society, people & govt.
Paper Introduction:
Introduction
This research will analyze the effect that the yakuza, Japan's organized crime syndicate, has on the Japanese economy and on the life of the people of Japan. The effect of the yakuza will be illustrated with an exploration of the yakuza’s infiltration of many legitimate businesses and how this specifically affects the Japanese economy. Further, there is short examination of the effect the yakuza have had in efforts by/ the Japanese government to reform the economy in the face of the worst recession in Japan's history since the end of World
War II. What is the Yakuza?
The yakuza is Japan’s organized crime syndicate. Although the yakuza has old roots in Japan, the yakuza did not prosper until after World War II.
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Recently, the Japanese government has begun tocrack down on the yakuza and their associated sokaiya, or related businesssyndicates. Yet the Japanese cinema isnot exploring some unknown underground culture, because the yakuza isusually not such a secretive organization. Much ofthe money made in the interest windfall is believed to have gone into theyakuza (Bremner, 1996, pp. The yakuza seeks payoffs inreturn for keeping quiet about arrangements made with some of Japan'sbiggest companies. The recession in Japan and East Asiahas produced problems in Japan's financial markets. Clearly, the yakuza is an unwanted part ofthe business world, but in some cases the yakuza has been welcomed bybusiness executives to resolve business disputes and for other tasks.However, the yakuza may have increasing difficulty in the future inconducting itself withtotal impunity because the Japanese government is increasinglyaware that reform of the ailing Japanese economy will not takeplace without a reduction of yakuza activities. Many Japanese untilrecently have thought of the yakuza as less than a criminal element. & Thornton. Afterall, many Japanese regard the yakuza as having samurai values, in thatyakuza groups have group loyalty and rules: honor among thieves. The Kizucollapse has been one of Japan's largest bank failures, and unfortunatelybefore the collapse, Kizu used $1 billion in Bank of Japan money to coverthe run on deposits. At the very least,the yakuza has a wideinfluence in Japan and has caused political fallout. As early as the 197 s, the sokaiya learned to become shareholdersin legitimate Japanese companies and to ask embarrassing questions atshareholder meetings in an effort to gain payoffs from anxious boardmembers unwilling to lose face in front of the public for bad businessdecisions. Some companies used thesokaiya to run shareholder meetings so that corporate boards werenot questioned too closely by legitimate shareholders in ordernot to subject board members to potentially embarrassing ques-tions overbusiness decisions. Japan is saddled with$8 billion in bad loans (Holley, 1996, p. One large groupcalled Rondan has posted its own web site for anyone with a computer tosee. This includes two yakuza executions ofbank managers of Sumitomo and Hanwa banks. Then, as Kizu became more desperate, very highinterest rates were offered and desperate loans were made to keep theinterest income available. Efron, S. Much of Japan's financial problems have been blamed on the yakuza,partly because of the belief that the yakuza caused the speculative"bubble" in the economy and partly because of the recognition that theyakuza is a corrupt influence on the Japanese economy. Some companies evenkeep money for sokaiya payoffs in their budgets (Bremner & Thornton, 1997,p. One specific example of the magnitude of the problem is the Osaka-based Kizu Credit Cooperative. For example, a Sony president was made to answer many hours ofquestions at a shareholder meeting by a sokaiya group in an effort to gaina payoff relating to the failure of the Sony Betamax standard for videotaperecorders. The presence of the yakuza should properly be considered anoddity in Japan since the nation is known for the safety of its streets,not its crime problems. (1993, October 14). A yakuzagroup approached him and pretended to intervene with creditors. Both groups are still regarded as having a social stigma in Japan(Economist, 199 , p. Conversely, other indivi-duals soughtyakuza aid in intervening with creditors to stave off bankruptcy. Since the banks would naturally seek foreclosure,the yakuza used both scare tactics and outright theft to accomplish its owngoals so that the loans are never repaid. Many believe this money will go to the yakuza. Mostyakuza sport elaborate tattoos. (199 , January 27). Ormonde, T. In one case, an automobiledealer in Hiroshima was in need of loans to stave off bankruptcy. 42-47). A1). The yakuza is represented by three major families in Japan. When the specula-tive"bubble" began to burst in the early part of this decade, banks and otherfinancial institutions were left with loans that the borrowers (oftenyakuza) refused to pay. The yakuza is still seenromantically, at least in popular images on-screen, as "Robin Hood" typeswho rob from the rich and provide for the less fortunate in Japanesesociety. References Bremner, B. Perhaps one of the most bizarre ritualsof the yakuza is the practice of lopping off digits from their hands.Typically, if a kobun (child in Japanese) makes a mistake or is questionedfor his loyalty to the oyabun (boss), then the underling will chop off hislittle finger above the second joint and send it to the boss as proof ofhis loyalty. (1997, March 22). Other well known families include the Tokyo- basedInagawa-kai and Sumiyoshi-kai syndicates, which have much far fewer membersthan the Yamiguchi-gumi syndicate. Since 1994, more than 44 attacks have beenreported on Japanese executives. Business Week, pp. Sanwa and others investedin Kizu to make a profit by using the "spreads" between the interest rates.Often, Kizu would inflate the value of loans on Osaka-based properties.Kizu would then lend money greater than the land value of a project tofactor in the costs of the land-turners (or jiageya). The yakuza prisoners are unusual in thatmost have their criminal defense paid for with yakuza money, not providedpro bono by the criminal defense bar as is typical with the rest of Japan'spenal institution inhabitants (Economist, 199 , p. Of course, Kizu is not an isolated case. Just a few years ago, the yakuza'sactivities were tolerated in the same neighborhoods (Ormonde,1992, p. The "Faustiann bargain for manycompanies goes back to the tradi-tional relationship the yakuza has enjoyedin Japanese society (Bremner & Thornton, 1997, pp. The Japanese also fear the dis-covery of the relationships the yakuzahas with many legitimate businessman and politicians (Economist, 199 , pp.192 ). However, the nonchalant appearance is beginning tochange in the face of Japan's recession (Ormonde, 1992, p. A1. Many people usedthe yakuza to accomplish business goals, such as eliminating businessrivalries. 42). 48). 19-21. The effect of the yakuza will be illustrated with an explorationof the yakuza's infiltration of many legitimate businesses and how thisspecifically affects the Japanese economy. In fact,using captured drugs is not legal in Japan for sting operations,eliminating a common method police use in Europe and the United States.Clearly, if Japan wants to root out the problem, new laws will have to bepassed in order to give the police the ability to stamp out the yakuza.Given the extent of the problem, the political will may be about to changeto accomplish that goal. For example, Sanwa Bank was one largeinvestor in Kizu, using its own corporate funds. A1). Cracking down on the yakuza has been difficult because theJapanese genuinely fear the yakuza and its violent reputation for dealingwith problems. A1). In effect,the bailout of Japan's economy may repre-sent the yakuza's biggest heistyet in Japan (Bremner, 1996, pp. The yakuza is a peculiar symbol for the Japanese. The yakuza is Japan's organized crime syndicate. Corporate Blackmail Another problem with the infiltration by the yakuza into Japan'slegitimate financial institutions is that of sokaiya, or yakuza linked tosyndicates specializing in corporate extortion. 42-44). Embarrassed company officials will try to avoid this fate by usingpayoffs, which is exactly what the sokaiya wants (Bremner Thornton, 1997,p. (1992, May). A1. pp. The sokaiya has grown more demanding and sophisticated by demandingthat payoffs actually become contracts with sokaiya-owned companies such asconstruction, vending machines or waste-hauling concerns (Bremner &Thornton, 1997, p. At one point, this group posted an attack on a construction company,suggesting it was taking kickbacks from subcontractors using extortion. 48. Bremner, B. Effects of the Yakuza on the Japanese Economy The Japanese economy is suffering one its worst economic recessionssince the end of World War II. 19-21). A criminalconviction for extortion is usually rewarded with a six-month prisonsentence (Efron, 1995, p. Eventually, the thrift collapsed. The tattoos cover the men from head to toeand are distinctively provided by specific tattoo artists. A1. In the United States, RICO and otherracketeering laws give the police the ability to catch people who organizebut do not commit the most serious crimes; Japan has no such laws. In August, 1995, this $12.5 billioncooperative (Japan's largest) collapsed after a run on deposits. Los Angeles Times, p. There are estimates of 8 , gangsters in Japan.In fact, some 33 percent of all prisoners in Japan's penal system arebelieved to be yakuza associates. Sugawara, S. Corruption and Scandal The yakuza continues to influence attempts by the Japanese governmentto reform itself and the economy (Holley, 1996, p. In fact, one major problem in Japan has beenthe lack of criminal laws that give the authorities the ability to crackdown hard on organized crime. During the rise ofthe economy, the yakuza took in cash from traditional sectors for organizedcrime. Although the yakuzahas old roots in Japan, the yakuza did not prosper until after World WarII. Until recently, the yakuza hasbeen readily identifiable in the biggest cities of Japan. With the rising unpopularity of the yakuza, however, somedoctors are making a good living removing tattoos and fitting prostheticfingers to former yakuza members (Efron, 1997, p. 44).Another method sokaiya groups are using is the Internet. Oftenthese inducements for aid turn into an opportunity for the yakuza to becomebusiness partners or owners of the business. The influence of the yakuza is evidenced by the estimatethat perhaps 1 percent of the bad loans recognized by the Japan Ministryof Finance--or at least $4 billion worth--are loans believed to have gonedirectly to the yakuza, although somesuggest the figure may actually be much higher (Bremner, 1996, p. In one case, an entire hotel wastorn down by a sokadya group associated with the yakuza so that thebuilding could not be auctioned off. Los Angeles Times, p. 44). In addition, the yakuza provides a place for the burakamin(regarded as an untouchable caste in Japan) and for Japanese of Koreandescent. World Press Review, p. (1996, February 24). The heyday of the yakuza may be coming to an endin Japan. Heazle, M. Furthermore, thestrength of speculation on such things as real estate has been blamed onthe yakuza's influence within Japan. New lawsdesigned to limit the effectiveness of the yakuza have beeninstituted to effect this goal. As units in apartment buildings come emptybecause of financial problems, yakuza gangsters will simply seek out emptyapartments and occupy the apartments. One major reason for Prime Minister Muruyama's ouster was theannouncement of a $6.8 billion dollar taxpayer bailout of the financialmess in 1995. In 1991, when land values began to collapse, Kizu sought to keep theinterest income high by inflating land values on loans even if the loanswere never to be repaid. A typicalreason for the languid pace of the reform of the Japanese financial systemis that the yakuza not only contributed to the speculative "bubble," butalso now contributes to preventing meaningful reform. IntroductionThis research will analyze the effect that the yakuza, Japan's organizedcrime syndicate, has on the Japanese economy and on the life of the peopleof Japan. 42-47). 3839), running pachinko-machineparlors, and drug-running, to both the Japanese stock market--fueling itsdrive upward--and the real estate market, causing a speculative" bubble. A far more typical example is that of yakuza gangsters becomingsquatters in certain buildings. 42-44. Unfortunately, the financial scandal in Japan has not been solved withthe comparative ease in which the United States was able to resolve its ownbanking crisis during the late 198 s (Holley, 1996, P. 2 ). Moreover, the social toleranceof the yakuza also seems to be lessening because it is notunusual for neighbors seek police action to oust their yakuzaneighbors from their lairs. (1997, July 21). 38-39. The yakuza's reputation for solving business disputes iswell deserved (Bremner, 1996, pp. Washington Post, p. Clearly, the yakuzaare indeed different. Often, theoffices of the yakuza are readily identifiable, and the members are attiredin tasteful business suits with business cards to match. One crimesyndicate even prints its own internal telephone directory; the offices arestaffed 24 hours a day. Ofcourse, the expectation is that Rondan will show up at a shareholdermeeting. The most prevalent is the Kobe-based Yamiguchi-gumi, which has atleast 33, members. 42-47). What is the Yakuza? Further, there is shortexamination of the effect the yakuza have had in efforts by/ the Japanesegovernment to reform the economy in the face of the worst recession inJapan's history since the end of WorldWar II. The rising economy of the 198 s provided the widestopportunity for the sokaiya, as many companies found themselveshiring (usually unknowingly) yakuza-based construction companies.Other companies used sokaiya for protection or as a strong-armforce to oust undesirable tenants. The yakuza gangsters are one of the few groups in Japan to carryguns. (1995, December 15). Conclusion The yakuza has been innovative in the way it makes money and peddlesinfluence in Japanese society. Sometimes, the gangsters will simplysublease the apartments they do not own to make money; at other times, thegangsters will demand the payment of rent from other legitimate tenantsafter disclosing to them that they (the gangsters) are the new owners. 48). The cardealer ended up transferring title to some of his businesses to thegangsters (Suguwara, 1995, p. The yakuza has been no stranger to theeffects of this recession. A1). Many of thegangsters have "perm" hairstyles. (1996, January 29). For manyJapanese, the yakuza represent a link to Japan's romantic past, a pastwhich was represented by honor and dignity in the minds of many Japanese.Perhaps the yakuza seems to conjure up a bit of constancy in the midst ofJapan's introspective crisis of the l99 s. 2 ). Forexample, Japanese cinema often has been filled with popular images ofyakuza gangsters (Economist, 199 , pp. Inaddition, gangsters typically force small business owners to pay protectionmoney for non-existent protec-tion services. The need for capital was so widespread that many legitimate businessessought and knowingly took in money from groups associated with the yakuza.Specific examples of money taken in from the yakuza include the following:jusen (Japanese equivalent of Savings and Loans in the United States) whichstarted lending money to yakuza-linked developers; real estate companieswhich lent money or rented out space to yakuza related companies; creditcooperatives which have links to the mob; and, finally,agricultural cooperatives which lent money to insolvent jusen (Bremner,1996, pp. 42-47. A1). A1). However, as the loan notes came due, and thereal estate bubble in Japan burst because of the recession, Kizu was caughtwithout enough tangible assets, and a run began by investors desperate toget some money out of the thrift. Since many of these relation-ships go back decades, thesokaiya became convinced it could success-fully blackmail companies intopayoffs by threatening to disclose the relationships. Further-more, given the dearth of lawyers in Japan, the yakuza hasfrequently been used by businessmen and politicians for various tasks, suchas settling disputes. Business Week, pp. The yakuza are also well known for their bodily trademarks. Far Eastern Economic Review, pp. The yakuza moved from the fringes of the Japanese economycontrolling prostitution (Heazle, 1993, pp. Economist. Despite the romantic view in the cinema of yakuza"warriors," the reality of the yakuza gangster is one of ruth-lessness andviolence. One problem with cracking down on the extortion is that the prisonsentences are very light, considering the possible rewards. The payment for that bargain has come due with interestingresults. Manylenders are unwilling to press demands for the money, and not only becauseof the problems described above. E. 42). Many times, the victim of an auto accident in Japancalls a local gangster and have a legal case settled very quickly andwithout a lawyer. 42-47). 42-47). The process begins by threatening executives with theexposure of disreputable information about yakuza-linked dealings at share-holder meetings or through magazine articles (usually published by sokaiyagroups themselves) and ends with anxious officials giving thousands ofdollars in "hush" money to the sokaiya. This occurred because Kizu was taking money by luringinvestors with high interest rates. The increasing recognition by the Japanese themselves of the extensivepattern of corruption has been rocking Japan politic-ally and socially inthe last few years; patterns of cooperation and corruption reach acrosspoliticians, Minister of Finance officials, bankers, and the criminalsyndicates. According to some estimates, taxpayer relief could hit $2 billion by the time the financial situation in Japan is reformed (Bremner,1996, pp. Nevertheless, the yakuza is an ingrained part of Japanese culture. Holley, D.
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