Outlook: Nikko caught up in gangster rap

It was only a matter of time before Nikko was fingered in the escalating financial corruption scandal in Tokyo. It was hardly likely that if Nomura, Yamaichi and Daiwa were bribing extortionists not to smash up their annual meetings Nikko would be any different.

Passing money in envelopes is such a deeply rooted facet of Japanese life that when payments to sokaiya gangsters were made illegal in 1983 it was only ever likely to be a hollow gesture. The government has been as implicated as anyone else in the culture of backhanders during its 50- odd years of single party rule since the Second World War.

It is hard from a Western perspective to understand why monolithic financial conglomerates such as Nomura and its rivals do not simply tell the likes of Koike-san to take a running jump. But ours is not a society where surface calm is all and writing out a fat cheque is better than losing face at a rowdy meeting.

The numbers involved are not particularly alarming - about pounds 70,000 in Nikko's case, rather more in the others - but the message they send out about the integrity of Tokyo in the run-up to Japan's Big Bang financial deregulation is not encouraging.

The promises made six years ago by Nomura and Nikko, after they were found to have illegally compensated favoured clients, have been shown to be wholly worthless. That should concern the European and American banks who are queuing up to forge alliances to take advantage of the brave new world apparently unfolding in Tokyo.

Japan's decline from financial superpower to backwater has been as rapid as its rise to pre-eminence 10 years ago. Already a third of Nikkei 225 futures are traded in Singapore and around 15 per cent of Japanese equities are traded in London. Tokyo's fall from grace shows how, built on speculation and graft, much of its wealth was an illusion.