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Yakuza Entrepreneurs Active Behind the Scenes

Article by Ito Hirotoshi, Journalist

Advancement into "legitimate society" by yakuza entrepreneurs

Despite not hoisting a family crest that is the billboard of Japanese gangsters, many mobsters related to Yamaguchi-gumi, Japan's largest yakuza organization with its headquarters in Kobe (western Japan), have advanced into the Kanto district (eastern Japan). The number of these gangsters greatly increased during the bubble economy. As of now, these yakuza entrepreneurs (businesses invested in by the Japanese mafia) are related to those business types easily penetrated by the underground, such as finance, real estate and the investment banking system. The yakuza have advanced into legitimate society from the underworld, and their companies most certainly support a certain part of the Japanese economy.

The Tokyo Metropolitan Police Department, which has been concerned about this situation, believes this tendency will further intensify because the bosses of Inagawa-kai, the largest yakuza group in Kanto, and Yamaguchi-gumi from Kansai have entered into so-called matrimonial relationship as of the end of November 1996, with each pledging their support over cups of sake. Therefore, in the coming year, the police seem determined to strengthen supervision and regulation of the movement of these gangsters.

An executive of the Tokyo Metropolitan Police Department who prefers to remain anonymous said, "The world of yakuza shows a notable 'the-whole-world-becomes-the-ruling-party' syndrome, as supported by Yamaguchi-gumi. This means that there will be fewer angry fights between the yakuza groups, thus less opportunity for us to prosecute them. We are going to concentrate on exposing crimes by Yamaguchi-gumi-related people who wear the suits of business enterprise through utilizing the Boryokudan Countermeasure Law."

Impossible to return from the "safe road"

During the bubble economy, thanks to never-ending price hikes in land and common stocks, everybody could make money and fatten the gangsters' purses. While doing this, mobsters accumulated the legal knowledge and established footholds to advance into legal businesses, including financial institutions as subcontractors in the construction, real estate and leisure industries. These kinds of mobsters established their own companies one after another and now play roles in the Japanese economy as yakuza entrepreneurs.

At present due to the bursting of the bubble economy, the fields where they can aggressively operate their businesses have been reduced, and they cannot obtain the "profit margins" that they used to enjoy. However, they cannot return from the road of creating a safe income in "legitimate business" that they have mastered. Based on their accumulated legal knowledge and personal connections, although their cover is scanty, they will carry on with their businesses without removing the corporate signboard. This is one of the aftereffects of the bubble economy. These gangsters have started a new type of business called "land devaluation dealer."

New business named "land devaluation"

Due to the real estate recession, land prices have continued to drop, but this does not mean that real estate agencies and regular Japanese companies do not need land. They hesitate to buy land because they expect that land prices will further decrease. However, everything has a minimum point in this market. There is a price below which real estate will not fall no matter what the situation is. The "land devaluation dealer" takes actions to reduce the price of the required land to this minimum level at once.

If this dealer just reduces the land price, he is simply acting the same as an "occupier" who disturbs the competitive bidding process. But the real greatness of the service provided by the land devaluation dealer is that everything, from dropping the land price to selling the land, is done by a team with their tasks shared among the occupier of the property, the financing company, the purchasing company and the resale company. Sueno Kenichi, president of Sueno Kosan, and Sasaki Kichinosuke, president of Togensha, were both arrested during the failed "jusen" lending firms scandal, and one of the criminal charges against them was disturbing the competitive bidding process. However, the services of the land devaluation dealer are legitimate. A police officer concerned with investigating land devaluation, upon understanding the reality of this business was amazed, commenting, "They are really sly."

Can police cut the lifeline to a "unit of legitimate and illegitimate business"?

This matter is not limited to land devaluation. In incidents related to jusen, other than big shots such as Sueno Kenichi and Sasaki Kichinosuke, several managers of companies that had borrowed money were also arrested. There are quite a few outrageous fellows who hid the money that they "withdrew" from the funds borrowed from the jusen. There are several yakuza entrepreneurs who manage and invest these funds.

A police officer who has been engaged in the investigation but prefers anonymity said, "The best we can do is to determine suspicion over the charges. There is certainly a strange flow of money. We can imagine that they are hiding funds. However, if yakuza entrepreneurs who are good at handling money in the underground disseminate and hide illegal funds, we have no way to intervene against it."

These kinds of actions relate to the scandals either directly or indirectly. Some financial institutions whose business went downhill raised their deposit amounts by using an "introducer," who manipulated deposits that were then lent to a third party, just as in the cases of the two credit unions that developed into scandals. Many of these introducers are yakuza entrepreneurs. In addition, recently many fraudulent business transactions, such as that of KKS, resulted in successive convictions. There are always mobsters behind these dubious businesses as their guardian angels.

Given how the Yamaguchi-gumi skillfully strengthens its control in the underworld utilizing yakuza entrepreneurs, the Tokyo Metropolitan Police Department plans to cope with the situation by increasing the regulations against yakuza executives. "We will do our best, just as if we were attacking the summit of the Himalayas," added the police executive.


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