Japan: banking on the mob

The old ties between the banks and the yakuza may be coming to an end, reports Martin Fackler

Dai-Ichi Kangyo Bank was certain to be embarrassed by tough questions at its shareholders' meeting, so it did what many self-respecting Japanese companies do: hired some gangsters.

Mingling with the grey-suited employees and shareholders at the 1988 meeting were a dozen men in crewcuts and shirts stretched taut by muscle.

When executives of the world's largest bank stood up to speak, these men cried "Bravo!" and "Well done!" When shareholders asked how a deputy branch manager had managed to embezzle $30m (pounds 19m), the gangsters shouted them down.

Seated near a wall, arms crossed, clad in a quiet grey suit, Ryuichi Koike smiled. He was the "sokaiya" the bank hired, a type of gangster unique to Japan who either blackmails companies or keeps blackmailers off their backs.

The bank, it turned out, had made a pact with Koike that a decade later would lead to one of the biggest financial scandals in Japanese history.

Koike, 54, stands at the centre, a man whose career casts light on the subculture of corruption that spreads throughout Japanese business and politics.

Between 1988 and last year, Koike would squeeze more than a quarter of a billion dollars in loans out of the bank at low interest rates and without putting up sufficient collateral. With Dai-Ichi Kangyo as his piggy bank, he spent $15m buying stock in Nomura Securities, Japan's biggest brokerage, and in other big brokerages.

Then he used his status as a major shareholder to extort from Nomura, too. The brokerage admits it paid Koike $3.3m; prosecutors say most of it was to keep him quiet at a 1995 shareholders' meeting, where Nomura wanted quietly to reinstate its former chairman and president. The reason Nomura wanted to keep it quiet? The two had resigned in disgrace in 1991 after helping Tokyo's biggest crime boss manipulate a stock.

Police have arrested Koike, Nomura's president, the chairman of Dai-Ichi Kangyo and more than a dozen other executives. They and other top managers at the bank and the brokerage have resigned. A former chairman of the bank hanged himself.

And the scandal keeps growing. Authorities recently raided Yamaichi Securities, Japan's fourth-largest brokerage, where the chairman, president and nine other top managers resigned too.

Koike was born in 1943 to a poor family in Niigata, a destitute rural prefecture on the northwest coast of Japan's main island. While in school, he worked as a "tekiya," a street peddler for the "yakuza", the Japanese mob. In 1970 he moved to Tokyo where he was taken under the wing of Kaoru Ogawa, who ran what was then Japan's largest sokaiya group, the Hiroshima Group.

Ogawa was impressed, he recalls, by Koike's diligence and "cold heart": Koike enjoyed making university-educated executives squirm.

When parliament cracked down in 1982 by making it illegal for companies to pay off sokaiya, Koike moved into the quieter and more lucrative side of the racket - protection.

Protection rackets have long been one of the costs of doing business in Japan. Hiring an "insider" or pro-company sokaiya means the company doesn't have gangsters trooping through its offices demanding envelopes full of yen. Their pet sokaiya can handle the payoffs to the tougher blackmailers and scare off the weaker ones.

Koike had a tutor in this new racket, too, another ambitious man from Niigata. This was Rikiya Kijima who offered protection to the major banks.

In 1985 Kijima took Koike to one of his best customers, Dai-Ichi Kangyo Bank, and introduced him to executives, according to the bank's own investigation into the scandal. Koike was soon receiving monthly loans of $8,500.

Bankrolled by Dai-Ichi Kangyo, Koike began to amass a fortune in property and stocks. But when the market collapsed in 1991, Koike could no longer meet the payments on his loans, artificially low as they were.

In 1995 the hard-pressed Koike saw a chance to put the squeeze on Nomura. The brokerage had better reimburse him for losses it had incurred trading for him, he said, or he'd start asking questions about the two disgraced executives Nomura wanted to restore.

Nomura gave him $3m in cash and hid part of it on the books as art purchases. Koike paid the money into Dai-Ichi Kangyo to cover missed interest payments.

A tip from someone inside Nomura led the police to Koike, and from there the money trail led straight to the bank.

Koike sits in a Tokyo jail awaiting trial. If found guilty, he faces just six months in prison for each of three charges of taking money from Nomura and Dai-Ichi Kangyo.

"Koike may be the last of the big insider sokaiya," says Kenji Ino, a journalist who writes about the yakuza. "Those looking to make money off companies must learn new tricks."

News
people

Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voicesVicky Chandler: Zoella shows us that feminism can come in all forms
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
News
people

Sport
nflAtlanta Falcons can't count and don't know what the UK looks like
News
i100
Arts and Entertainment
High notes, flat performance: Jake Bugg
music

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

News
The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London