From Drugs to Insider Trading, Yakuza Gangsters Branch Out

From Drugs to Insider Trading, Yakuza Gangsters Branch Out

By Hiroshi Hiyama on 5:44 pm December 1, 2013.

Tokyo. Japanese mobsters driving flash cars purchased with bank loans. Executives bowing in apology for loaning millions to those underworld figures. And high-level officials vowing to squash the crime syndicates, known as yakuza. Japan Inc. is engulfed in its worst mob scandal in years and it’s shining a rare light on the links between big business and shadowy organized crime groups usually known for lowbrow ventures like extortion and loan sharking.But with membership falling as police ratchet up a crackdown, experts say the yakuza are branching outside their traditional business into everything from insider trading to funding business startups.

“Insider trading has become huge — you can make much more money manipulating stocks” than extorting businesses, says Jake Adelstein, a crime writer whose bestselling memoir “Tokyo Vice” is set to become a Hollywood movie.

Adelstein, a former reporter at Japan’s Yomiuri daily, likens the Yamaguchi-gumi, Japan’s biggest organized crime group, to “Goldman Sachs with guns.”

Many mobsters — forever associated with full-body tattoos and lopped-off pinky fingers — have now ditched that tough guy persona in favour of tailored suits and a clean-cut look that could pass in any boardroom, Adelstein said.

The yakuza occupy a gray area in Japan’s usually law-abiding society. They are both feared and loathed as social outcasts, but revered in equal measure through film, fanzines and manga cartoons.

Like the Italian mafia or Chinese triads, the yakuza engage in activities ranging from gambling, drugs and prostitution to loan sharking, protection rackets and other illegal ventures often run through front companies. But unlike their foreign counterparts, yakuza are legal groups with offices in big Japanese cities, and they have historically been tolerated by authorities, although there are periodic clampdowns on some of their less savory activities.

But Tokyo is now under intense pressure from abroad to clamp down on the yakuza and their money laundering, as the US Treasury Department works to freeze the overseas assets of top Japanese crime groups that it says make “billions of dollars annually in illicit proceeds.”

The crackdown at home has intensified after Mizuho Bank said in September that it had loaned money to organized crime members, an admission subsequently repeated by at least four other major lenders including Japan’s biggest bank, Mitsubishi UFJ Financial Group.

Sometimes loans were legitimately used by gangsters to buy foreign sports cars or other expensive items, while in other cases the car was quickly sold on the black market with the loan never paid back.

The scandal at Mizuho worsened after it initially said top executives knew nothing about the loans, only to backtrack as a company-commissioned report blasted its laissez-faire compliance.

Mizuho later said more than 50 executives would be punished, with its chief executive foregoing pay for six months.

Major lenders are routinely approached by those with links to organized crime looking to raise money, said an anti-yakuza campaigner in Tokyo, echoing calls from Finance Minister Taro Aso, among others, to tighten banking rules.

“Many companies are trying not to deal with organized crime… But it’s difficult to filter everything because their methods are also becoming sophisticated,” the campaigner said.

Agence France-Presse