Links between the Yakuza and Mainstream Political and Business Organizations in Japan - Research Paper Example

Links between the Yakuza and mainstream political and business organizations in Japan in recent years 2008 Introduction Yakuza, one of the largest organized crime groups in the world, have changed their colors over the recent years. From the violent manner in which the full-body tattooed Japanese men openly indulged in gambling, extortion, sex rackets and drug trafficking, they have turned into covert yet sophisticated practices over the recent years. The Yakuza’s fortunes have followed Japan’s economic booms and busts over the years. With 15 years of economic recession and lull in the property markets, the Yakuza groups have had to explore other avenues to raise funds required to maintain the lavish lifestyles and the intricate networks of gang operations. Particularly over the last decade, following stricter laws to suppress the Yakuza and civil movements against organized crime, the Yakuza have had to operate discreetly. Yet, there have been frequent reports of the Yakuza being involved in Japanese politics and businesses. Most interestingly, the Yakuza have entered into the legitimate financial markets through front companies. Globalization and flow of international capital in the Japanese financial markets have made the latter very complicated. The Yakuza have taken advantage of the flow of short-term capital into the financial markets and make money through manipulating company stocks. As a result, their influence over mainstream business and politics in Japan continue to flourish despite the global attention and attempts to curb them. In this paper, I will study the recent activities of the Yakuza to understand how it has been able to influence mainstream politics and business in Japan. While the main question under study is to see how the Yakuza has been able to maintain its strength despite the strengthening of laws against it, the sub-questions involve an investigation into the diversification and growing sophistication of the Yakuza’s activities and the impediments in the Japanese political and economic scenario that have remained as the major roadblocks in eliminating the Yakuza. In order to understand the real sources of strength, it is essential to closely study the various entanglements between companies, financial institutions and organizations that may have links with the Yakuza. Since the Yakuza do not publicize the organizations and their activities as openly as before, I will attempt to explore into the organizations that may have indirect links to the Yakuza. Financial speculation and investments are the main activities of the Yakuza in recent times. Hence, I will attempt to study the shares and companies that have been most volatile in Japan in order to understand if the Yakuza have had a role to play in these. The strong network The National Police Agency, which infiltrates into Japanese crime syndicates to track their movement. It was estimated that in December 2006, there were 84,700 Yakuza gangs, about 1,600 less than in the previous year. However, yakuza gangs are increasingly employing part-time members rather than full-time ones since violence no longer pays as much as it used to (Japan Times, 2007). There were 41,500 full-time Yakuza members and 43,200 part-time or semi-regular members who were not affiliated to any particular gang. As compared to this, there were 63,800 full-time members and 27,200 part-time members in 1991. According to the National Police Agency, members dissociated from full-time mob activity and camouflaged their activities through business, political or social activities (Wesley, 2007). After Kenichi Shinoda was sworn in as the head of the Yamaguchi-gum in 2005, turf wars and gang violence have increased, particularly as the biggest group is expanding from Kobe into Tokyo. In February 2007, two senior members of rival gangs were killed as was Itcho Ito, the Mayor of Nagasaki, in April the same year. In May, 2007, a former member of Yamaguchi-gum took his ex-wife hostage and killed a police officer (McCurry, 2007). The following table shows the membership figures for the various Yakuza groups in 2007, as reported by Johnston, 2007. The Yamaguchi-gum is the most powerful gang, with 99 affiliate gangs. The head of the gang, Kenichi Shimoda was sentenced to six-years prison term in 2005 and the defacto leader of the gang is Kiyoshi Takayama (Johnston, 2007). The top three syndicates, Kobe-based Yamaguchi-gum (21,000 members), Sumiyoshi-kai (8,000 members) and Inagawa-kai (5,000 members), the latter two based in Tokyo, comprised as much as 73 percent of Yakuza members. Turf wars have been reported even in the recent years, particularly as the Yamaguchi-gum is trying to make inroads into Tokyo. After a lull in 2006, with only two people killed in violence, the number of people killed in gang wars rose to eight in the first half of 2007. There were 33 incidents of shooting reported between January to June 21, of which 31 were gang-related (McCurry, 2007). The period when the Yakuza flourished economically the most was in the bubble years of the 1980s when the groups extorted money from government construction projects. Not only did the gangs become powerful but a large number of new groups also came into existence. Since 1992, while only the stronger Yakuza groups have survived, most groups have had to operate indirectly. Despite the clampdown, it is estimated that there are 80,000 Yakuza groups that operate through 600 legitimate companies that function as their front. The Yakuza continue to have links with politicians and bureaucrats as earlier but indirectly to avoid being pulled up by the law enforcing agencies. Earlier, the Yakuza was the most-publicized crime syndicates in the world. The gangs had their offices with signboards and members flashed business cards and full-body tattoos. With anti-crime laws, the gangs have become much low-keyed. Most of the signboards have been taken off, the gang members do not mention the name of the gang on the business cards. Instead, they operate behind the façade of front companies that are ostensibly political or social organizations. Resistance over organized crime Resistance over the violence that the Yakuza spread is growing. Recently, citizens of Kurume in western Japan, keen to control crime in the city, have gone to court to make the Dojinkai gang to vacate office premises in the city (Guardian, 2008). Citizens claim that the Yakazu continues to be as violent as before and use arms that are used in wars, like grenades, bombs and guns that can be used from a distance (McNeill, 2008). There have been incidents in Kurume in which a gang member walked into a hospital and shot down a man whom he mistakenly identified as a rival and a spraying of machine gun bullets in a busy shopping area. The Dojinkai gang operates sex businesses, loan sharks and extortion and protection rackets in the city (McNeill, 2008). The new businesses The stricter the police get in Japan it becomes all the more difficult to track down gang members rather than eliminating them totally. This has been revealed first hand by Shoko Tendo, daughter of a gang member and herself a drug-user gang member in her youth, in her book Yakuza Moon (Lies, 2007). According to Tendo, the Yakuza was traditionally seen as the Samurai but the police crackdown and the economic problems of the country have forced the Yakuza to turn to covert routes and hence lose their cultural traditions (Lies, 2007). Besides, as Japan is becoming an ageing country, there are fewer young men who take up violence as career option. Instead, they take to stock manipulations and other financial crime (Lies, 2007). Police routinely crack down on extortionists in construction projects, that were the Yakuza’s most lucrative business, as well as bars and restaurants, which were their next targets. Over the years, the gangs have changed tactics. They no longer display their names on the signboards of their offices or on their business cards. Earlier, the police could raid Yakuza offices and check their money sources as they were not totally antagonistic towards the police. However, with the change in the legal framework, the Yakuza have become more surreptitious (McCurry, 2007). However, although the police cracked down on the Yakuza violence, the regulatory environment have continued to be lax in the financial sector, thus providing the Yakuza enough opportunities to reap benefits. The Housing Loan Administration Corp. was established to collect debts of the banks. The organization was too weak to break into the Yakuza-borrower networks (Business Week, 2002). Much of the Yakuza’s financial strengths can be found from its abilities to use the government’s economic policies to its benefits over the years. The present strengths of the gangs also stem from its historical connections with businesses, bureaucrats and politicians. The banks continue to lend money without studying the financial strengths of the borrowers very closely, often on the instructions of the bureaucrats. Particularly as big borrowers like Toyota and Sony raise funds from the international markets, banks push loans to smaller companies, which eventually are found connected to mobsters (Kattoulas, 2002). Some banks even hand over money to Yakuza bosses directly. Even tough laws banning the Yakuza, banks continue to lend to the yakuza front organizations, kigyo shatei. In an investigation into a Japanese bank that was looking for a foreign partner, it was found that although the bank’s management was clean, 80 percent of its loans were to Yakuza front organizations (Kattoulas, 2002). The National Police Agency released a report on August 20, 2008 that the Yakuza is switching from its traditional businesses of drugs and prostitution to financial markets (Pesek, 2008). Through the covert companies and social activity groups, the Yakuza engage in stock trading, particularly in undervalued companies in which the Yakuza take huge stakes (Pesek, 2008). This follows from the money that the Yakuza gangs raised in the bubble years and invested in the stock and property markets. Particularly after the bubble burst, financiers coaxed the Yakuza to buy stocks at inflated prices by paying them in cash upfront (Kattoulas, 2002). Since the stock markets were in a bad shape and normal investors did not invest, the bankers were dependent on the Yakuza for high-value projects like construction. In 2004, it was estimated that Yakuza revenues were in the range of 1.07 trillion yen to 1.6 trillion yen without taking into account the indirect money (Johnston, 2007). According to Jake Edelstein, former police reporter with Asahi Shumbhun, told Bloomberg Television on September 3, 2008, that the Yakuza-finance networks are a serious impediment to Japan’s economic recovery since if Yakuza-tainted companies are delisted, it would give a bad signal for foreign investors. In a white paper, the National Police Agency calls this tendency of Yakuza trading in the Japanese financial markets as is “a disease that will shake the foundations of the economy” (quoted by Lewis, 2008). The Securities and Exchange Commission has identified 200 publicly traded companies, many of which are prominent ones, that have links with mafia money directly or indirectly. The Osaka Stock Exchange is also contemplating delisting companies tainted with Yakuza money (Lewis, 2008). However, it is becoming increasingly difficult to track down the Yakuza involvement in financial markets as they take a number of circuitous routes, including employing people who have been recently laid off from companies or securities trading companies as a result of the economic downturn. The state broadcaster, NHK, reported that some of the Yakuza gangs even run their own unofficial stock-trading floors where stocks worth millions of yens are traded every day. A recently published book also claims that many Yakuzas even have former bankers and accountants on their payrolls. Audit firms are also employed to sign false company accounts that manipulate earnings and stock prices. These professionals are used to forge very sophisticated financial deals that make it difficult for the government agencies to differentiate legal and illegal financial transactions (Lewis, 2008). The Japanese media, too, do not report much of the Yakuza activities in fear of reprisal. Many international journalists who dared to report on the Yakuza have been hounded even after they left the country. It is estimated that as much as 50 percent of the bad debt of the Japanese banking system, considered to be the main reason for the decade-long recession, cannot be recovered because of Yakuza-politician-banker links (Kattoulas, 2002). The banking and industrial circles of Japan are highly connected with the politicians, who influence in major decisions. The Yakuza, with their traditional liks with politicians – the right-wing as well as the liberal – have taken advantage of this link and exploited their political connection to enter the financial markets. It is feared that some of this money has also been invested in the American stock markets as well, thus spreading the links globally. Besides, many American investors have also bought over Japanese companies and property during the recession years only to realise that these have Yakuza links (Kattoulas, 2002). As a result, US companies wanting to invest in Japan now undertake extensive due diligence to uncover Yakuza connections, often employing FBI agents. They have found that the Yakuza is present in all sectors of the Japanese economy, ranging from chemicals to hospitals. The Yakuza also has global links with crime through drag cartels and arms smuggling. For example, the Yakuza trafficks methamphetamine into the United States from where it smuggles in arms into Japan (Calvani, 2008). Yakuza gangs also raise money from a variety of innovative means to swindle. For example, four members of an affiliate of Yamaguchi-gumi were arrested in 2007 for swindling a job placement office of 63.6 million yen. The four suspects were made to appear as if they were fired by a building material sales firm (which actually did not exist) owned by another gang member as a result of which they claimed the money from the placement office (HDR Japan, 2007). Conclusion Although it is common knowledge that the Yakuza continues to exert influence in Japanese business and economy, very few politicians are willing to take a strong stance against the gangs since many of them are dependent on the Yakuza for campaign money. Besides, there is a nexus between bureaucrats-police officers- organized crime. The bureaucrats and police officers are poorly paid compared to the private sector, inducing them to turn corrupt. Many of them even join Yakuza front organizations after retirement and use their official connections to raise money for the Yakuza. Even the media hesitate to report on the Yakuza activities extensively for fear of repercussions or because the media organizations also have Yakuza links (Kattoulas, 2002). After a decade-and a half-long recession, the Japanese economy has looked up over the last couple of years. This has not only cheered up the Japanese people but also the Yakuza, as Raisuke Miyawaki, former head of National Police Agency noted in a television interview (ABC, 2006). Miyawaki had earlier coined the term “Yakuza recession” when he blamed the Yakuza for prolonging the economic recession because of the non-recovery of huge amounts of bad debts. With businesses picking up, the Yakuza is once more getting active in the property markets, which it had extorted even earlier. The Yakuza is linked with right-wing politics in Japan. Many of the groups that indulge in corporate extortions are registered as political organizations. The Yakuza wields considerable powers in Japan even to this day. The government is too weak to control the activities of the Yakuza. As Mitsuhiro Suganama, a former public security agency official told newsmen that the Chubu International Airport near Nagoya in 2005 without the approval of the Yakuza. Local journalists in Chubu have repeatedly mentioned that the politicians are intricately linked with the Yakuza. Thus despite the anti-yakuza laws, the Yakuza continue to influence mainstream business and politics in Japan. Fewer Japanese are joining Yakuza gangs but those who do are much smarter, more cunning and fearsome than the members who earlier took to violence as profession. The gangs are taking lessons from global crime syndicates as well as the corporate sector to devise newer and more sophisticated means than plain violence to maintain their financial strength. Besides, the Yakuza continues to hold considerable influence within the political and bureaucratic ranks to manipulate laws. Works Cited ABC (2006). Yakuza on the rise again in Japan. The World Today. May 23. Transcript accessed on September 22, 2008 from http://www.abc.net.au/worldtoday/content/2006/s1645231.htm Business Week (2002). The Yakuza: Bad Debt, Bad Men. February 25. Accessed on September 21, 2008 from http://www.businessweek.com/magazine/content/02_08/b3771149.htm Calvani, Sandro (2008). The mafia and their global plunder. UNICRI. June 8. Accessed on September 22, 2008 from http://www.unicri.it/wwa/staff/speeches/080610_dir.pdf Guardian (2008). Japan: Residents go to court to evict Yakuza. Guardian, August 26. Accessed on September 22, 2008 from http://agonist.org/20080826/japan_residents_go_to_courts_to_evict_yakuza HDR Japan (2007). Yakuza gang leader arrested for swindling millions of yen from job placement office. October 9. Accessed on September 22, 2008 from http://www.hdrjapan.com/japan/japan-news/yakuza-gang-leader-arrested-for-swindling-millions-of-yen-from-job%11placement-office/ Japan Times (2007). Part-time mobsters now outnumber career hoods. February 9. Accessed on September 22 from http://search.japantimes.co.jp/cgi-bin/nn20070209a4.html Lies, Elaine (2007). Gangster daughter sheds light on Japan underworld. Reuters. September 3. Accessed on September 22, 2008 from http://www.reuters.com/article/newsOne/idUST26750520070903?pageNumber=1&virtualBrandChannel=0 McNeill, David (2008). The Town that Took on the Yakuza. The Independent (London). September 8. Accessed on September 22, 2008 from http://findarticles.com/p/articles/mi_qn4158/is_20080909/ai_n28084486/pg_2?tag=artBody;col1 Kattoulas, Velisarios (2002). Japan: The Yakuza Recession. FEER January 12. Accessed on September 21, 2008 from http://www.fsa.ulaval.ca/personnel/vernag/eh/f/noir/lectures/the_yakuza_recession.htm Lewis, Leo (2008). Yakuza stalk Japanese markets as organised crime opens new front. The Times. August 28. Accessed on September 21, 2008 from http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4621950.ece Maruko, Eiko (2002), The "Underworld" Goes Underground: Yakuza in Japanese Politics, Harvard Asia Quarterly, Vol VI No 3 Summer. Accessed on August 28, 2008 from http://www.asiaquarterly.com/content/view/119/40 McCurry, Justin (2007). Yakuza moves from street to boardroom. Guardian. August 27. Accessed on September 21, 2008 from http://www.guardian.co.uk/world/2007/aug/27/japan.justinmccurry Pesek, William (2008). Hey Scorsese, Japan's Yakuza Has a Story for You, Bloomberg, September 10. Accessed on September 21, 2008 from http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aU3ZmO2FATRk Worsley, Ken (2007). Yakuza part-timers now outnumber full-time employees. February 9. Japan Economy News. September 2. Accessed on September 21, 2008 from http://www.japaneconomynews.com/2007/02/09/yakuza-part-timers-now-outnumber-full-time-employees/ Read More