The Business of Organised Crime in Japan
| Pages | 63-72 |
| DOI | https://doi.org/10.1108/eb027121 |
| Date | 01 January 1997 |
| Published date | 01 January 1997 |
| Author | Hiroshi Goto |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control 1/1
The Business of Organised Crime in Japan
Hiroshi Goto
Historians may write that the 1980s were the
decade when Japan proved itself to be an economic
power competitive with other leading nations, and
by the end of it, the power had became so gigantic
that it dominated major properties in countries all
over the world. In the 1990s, however, a number
of economic scandals disproved this and people
have realised that such power was a mere façade
where nothing much, especially in the business
environment, has changed behind the scenes.
Such a viewpoint was supported in the second
week of June 1996 by two further big business
scandals uncovered one after the other: an alleged
bribery offer of proprietary benefit to sokaiya/
yakuza by Takashimaya, one of the oldest and big-
gest department-store chains; and an alleged
US$1.8bn loss of Sumitomo Corporation, one of
the biggest
sogo
shosha (general trading companies)
through the futures and options trade in copper.
The Takashimaya scandal is nothing new. It has
been implicitly admitted as an unlawful and
immoral but unavoidable practice of Japanese busi-
nesses to have an underground relationship with
yakuza gangsters. What may have been exceptional
with regard to Takashimaya was the amount of the
financial benefit allegedly given to the sokaiya/
yakuza group, which is estimated to be the largest
amount of all similar scandals of this kind, over
¥80m (£47m).1 However, the Sumitomo scandal
may be of a nature which no Japanese, nor any
other business person has experienced: firstly in
terms of the loss suffered (US$1.8bn)2 which is
bigger than the one in the Daiwa Bank scandal
(US$1.1bn); then in terms of the impact on the
copper market; the pitfalls in the market regulation
and corporate governance; and finally in terms of
the difficulties in international cooperation for the
investigation.
This paper will analyse these apparently
dif-
ferent types of scandals, the reasons behind them
and their backgrounds, mainly through the infor-
mation from the media and the viewpoint of the
author as an in-house legal counsel in a Japanese
firm. What emerges is that much of the problems
are inherent in the traditional Japanese environ-
ment, but, especially in the Sumitomo scandal,
Page 63
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