Yakuza Doodle Dandies
Asian Vampire Bats in the American Belfry
Sightings from The Catbird Seat
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From Webster’s New World Dictionary, College Edition:
doo-dle (v.t.) - to make a fool of; to fool.
dandy (n.) - a man who pays too much attention to appearance; a fop.
September 22, 2008
Last major investment
banks change status
By MARTIN CRUTSINGER
It was the end of an era on Wall Street as the Federal Reserve granted permission for the last two major investment banks — Goldman Sachs and Morgan Stanley — to become bank holding companies in order to stay in business.
The Fed announced late Sunday evening that it had approved the request, which will allow Goldman and Morgan Stanley to create commercial banks that can take deposits, bolstering the resources of both institutions.
The change is the latest seismic shift on Wall Street as the financial system tries to cope with mounting problems that began more than a year ago with the subprime mortgage crisis.
The Fed had originally said Sunday night that the change in status from investment banks to bank holding companies would not take place for five days, pending review on antitrust grounds. The Fed announced Monday, however, that after discussions with the Justice Department, the status change for both institutions could take place immediately.
After weekend meetings where the Treasury Department, Fed and congressional staff ironed out the program's details, Sen. Christopher Dodd said Monday it's equally important to act responsibly as it is to move quickly on the legislation needed to stabilize the country's troubled financial markets.
Dodd, chairman of the Senate Banking committee, said on CBS's "The Early Show" that many members of Congress believe a legislative relief package also should be tailored to protect taxpayers in the best way possible.
Democrats in Congress said they will add provisions in the bailout measure to protect people in danger of losing their homes and measures to cap executive compensation at firms who get to unload their bad mortgages debt onto the government.
But the proposal is still expected to win quick congressional passage because both parties are concerned about the adverse reaction in financial markets should the measure look like it is being delayed.
The Fed's board of governors granted the investment banks' requests by unanimous vote during a late Sunday meeting in Washington.
The change of status means both companies will come under the direct regulation of the Fed, which oversees the nation's bank holding companies. The banking subsidiaries of the two institutions will face the stricter regulations that commercial banks are required to meet. Previously, the primary regulator for Goldman and Morgan Stanley was the Securities and Exchange Commission.
Shares of both institutions had come under pressure ever since the bankruptcy filing last week by investment bank Lehman Brothers and the forced sale of investment bank Merrill Lynch to Bank of America.
Three people familiar with the matter said Monday that Japan's largest brokerage Nomura Holdings is buying Lehman's Asian assets. Britains Barclay's Bank received bankruptcy court approval early Saturday morning to purchase Lehman's North American brokerage operations.
Shares of Morgan Stanley rose 3.5 percent on word of a possible investment by a Japanese bank while Goldman's fell 3.6 percent in afternoon trading on Monday. Overall, U.S. stocks pulled back Monday. In early afternoon trading, the Dow fell 245.71, or 2.16 percent, to 11,142.73. Broader stock indicators also declined.
Investors feared that the last remaining independent investment banks would not be able to survive in their current form, especially after hedge funds saw some of their funds at Lehman Brothers frozen as part of its bankruptcy. There had been speculation that both institutions would be acquired by commercial banks, whose ability to take deposits would give them a stable source of funding.
In the surprise announcement late Sunday, the central bank said Goldman and Morgan Stanley would be allowed during a transition period to get short-term loans from the Federal Reserve Bank of New York against various types of collateral.
The decision means that Goldman and Morgan Stanley will be able not only to set up commercial bank subsidiaries to take deposits, giving them a major resource base, but they will also have the same access as other commercial banks to the Fed's emergency loan program.
After the collapse of Bear Stearns and its forced sale to JP Morgan Chase last March, the Fed used powers it had been granted during the Great Depression to extend its emergency loans to investment banks as well as commercial banks. However, that extension was granted on a temporary basis.
http://news.yahoo.com/s/ap/20080922/ap_on_bi_ge/bank_change
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WHAT'S WRONG WITH TOKYO'S MARKET Roaring profits and rapid growth masked widespread fraud and abuse in Japan's financial markets. Radical reforms and better market surveillance are what is needed.
By John J. Curran
(FORTUNE Magazine) – THE BOOM YEARS masked the squalor.
From 1985 to 1989, Japan's stock market rose by 197%. Brokers and bankers were swimming in profits. To outsiders, at least, Japan's financial system seemed an exemplar of sound business practice.
Now the market is down, way down, and the picture is decidedly less pleasant. Says Peter Tasker, a strategist at Kleinwort Benson in Tokyo: ''When the tide goes out, you see what's left on the beach.''
Stretched across Japan's financial landscape is an endless string of payoffs, mobster dealings, and pervasive fraud. The scandals have led to high-level resignations and loud cries for reform. But Japanese officials have been reluctant to order fundamental changes for fear of upsetting a financial system that has been so spectacularly successful in providing cheap capital to Japanese industry.
Yet it is precisely because of that success, and the resulting growth in the size and complexity of Japan's markets, that the country needs so urgently to recast its regulatory framework. Its financial institutions, though enormous, are still operating as if they were alone in the world, with no global competitors.
That's not so bad for Western financial firms, who in the short run will continue to grab business in Tokyo. But if Japan's giants continue to operate under outdated regulations, fraud and abuse are bound to increase. And if global investors lose confidence in Japan, nobody wins.
The latest revelations -- which involve far more than the stock market -- show just how wide and deep the problem has become: -- Sumitomo Bank, Japan's second largest, lends over $1 billion to Itoman, an Osaka trading company headed by a former official of the bank. In early 1990, Itoman falls under the influence of unsavory characters and squanders nearly $2 billion in shady deals.
Disgraced in part by the bank's links to Itoman, Chairman Ichiro Isoda resigns. This summer, three Itoman executives, including the former president, are arrested.
-- Two of the country's top brokers, Nomura Securities and Nikko Securities, acknowledge having lent more than $250 million to a well-known underworld organization. Nomura Chairman Setsuya Tabuchi is forced to resign as a vice chairman of Keidanren, Japan's prestigious business association.
-- Tax authorities leak information that Nomura and Nikko have been secretly reimbursing big clients for stock market losses. Nomura's top two executives resign, as does Nikko's president.
Many other brokers are soon implicated.
-- A Tokyo restaurateur, an actor, and some 20 companies borrow $1.9 billion from a number of financial institutions including Fuji Bank using fraudulent deposit slips as collateral. Toyoki Kobayashi, an aide to Finance Minister Ryutaro Hashimoto, helped persuade Fuji Bank to make some of the loans. Kobayashi resigns in August. An embarrassed Hashimoto may soon follow.
-- Nui Onoue, 61, a mystic and restaurateur in Osaka, talks a branch manager at a local credit union into forging deposit slips for her. She uses the slips, later described by officials as clumsily made, to borrow about $1.7 billion from 12 institutions, including the prestigious Industrial Bank of Japan.
Officials at Japan's Ministry of Finance, which regulates the nation's banks, are astonished at the magnitude of the fraud. Scandal is certainly nothing new to global financial markets. Look at Salomon's transgressions in the U.S. Treasury market (see preceding story), Germany's insider-trading furor, or even Drexel Burnham's long rap sheet of securities law violations.
The situation in Tokyo, however, is more a systemic failure than the result of occasional outbursts of greed. As with most things in Japan, the explanation is not simple. Many of the recent headline-grabbing scandals are not even illegal under Japanese law.
Payoffs from big brokers to clients are a violation of U.S. securities laws, but not of Japan's. Nor is it illegal for a broker or banker to handle hot money from gangsters, as it is in the U.S. Said a senior Japanese official to the swarm of reporters who pressed him on this matter: ''Gangsters have rights too.''
The lack of legal boundaries is a Japanese hallmark. Without clear rules to guide them, businesses are forced to rely on the country's ministries to steer them through the legal haze. The result: no public confrontations, just quiet suggestions from bureaucrats and quick compliance by companies.
In the case of the Ministry of Finance, known as MoF, legal vagueness has been combined with tight regulation, which only seems like a contradiction. The MoF drew strict boundaries on what lines of business financial firms could engage in, but aside from setting fees and interest rates made few laws governing how they could operate within those limits.
When the ministry devised its postwar plan, it decided not to leave the financial industry's development to the whims of competitive market forces. It limited how much banks could lend and to whom, and set interest rates as well. On the brokerage side, it fixed commissions at a fat premium to ensure the brokers' financial strength. In the 1960s it established licensing to control the number of firms.
THE U.S. ONCE IMPOSED similar restrictions, including fixed brokerage commissions. But American regulators, eager to make the industry more competitive and efficient, opted for deregulation in the early Seventies. Such a need for efficiency has been building in Japan for a long time, but officials continue to follow a different agenda.
Notes Robert Zielinski, an analyst at Jardine Fleming: ''Above all else, the financial markets are intended to provide a cheap source of financing for industry. That's MoF's priority.''
Kenneth Courtis, an economist and strategist at Deutsche Bank Capital Markets in Tokyo, puts it another way: ''In Japan, the stock market has been an instrument of policy rather than an object of policy.''
The distinction is important. American policymakers have responded to consumers' desires for a low-cost, efficient market, while Japanese officials have used the stock market to meet industry's need for low-cost financing. The MoF's tight controls have kept Japan's markets orderly, and the cost of capital low. But they have also created inequities among participants, which has opened the door to abuse.
Take the brokerage industry. As the stock market spiraled up in the late 1980s, the big four brokers (Nomura, Daiwa, Nikko, and Yamaichi) filled their pockets with high, fixed commissions. As profits piled up, clients sought ways to recover some of that windfall. Says one Western broker in Tokyo: ''It seems quite reasonable to assume that if you are a big customer, and you know you're being overcharged on some things, like commissions, that you might look to get it back somewhere else.''
SO THEY DID.
Big institutional investors began demanding guaranteed results. Flush with profits, and enjoying the rising market, brokers readily agreed, many promising returns as high as 8%. That was no problem until the stock market dropped, triggering huge compensatory payments -- and eventually scandalous publicity.
The MoF's regulatory grip on the market has also stunted the maturation of major firms. Says Zielinski: ''Despite its size, this remains a very primitive market.''
The big four brokers account for nearly three-quarters of the new issue and equity underwriting business on the Tokyo exchange's first section, the equivalent of New York's Big Board. But by many accounts, they remain relatively unsophisticated. Their research, for instance, is often superficially bullish. This has hampered their efforts in the U.S. and Europe.
At home, foreign firms are stealing market share and outperforming them as money managers. Also, by relying too heavily on MoF for legal guidance, they have failed to develop strong internal controls. Says David Pike of UBS Phillips & Drew in Tokyo: ''Japanese brokers don't understand the concept of conflict of interest. To them, any business is good business.''
No firm better symbolizes the high cost of such a protected environment than Nomura. With $8.5 billion in revenues in 1990, it is the largest brokerage in the world. Yet the company $ has long drawn allegations of insider trading, which it denies.
Nomura's new chairman, Yukio Aida, is philosophical about his company's tainted image and the need for reform. Though the recent acts do not technically violate Japanese law, they are counter to common business ethics.
Says he: ''Nomura is like a stream. Lately the stream has become dirty. We must make the water clean again.''
Few believe that Japan's life insurers and banks are any less polluted. The head of one Western brokerage firm that services some of Japan's big life companies gives a glimpse into their operational ethics: ''The life companies asked us to manipulate prices and trades so that they could shift some of their losses into next year. What they were asking us to do would be considered outrageous by Western standards.''
As for the banks, consider those two incidents involving fake deposit slips. Would any U.S. institution with even modest internal controls have fallen for such major fraud?
Perhaps most worrisome, the lack of sufficient controls on the financial markets has left them vulnerable to penetration by the Yakuza, Japan's mob.
Yakuza members often appear like characters out of Dick Tracy, with their broad pin-striped suits, elegant tattoos, and clipped pinkies (cut off to atone for violations of the gang's code of conduct). They are tolerated by the police, who let them run prostitution, gambling, and loan-sharking with little interference.
But in the 1980s the Yakuza stepped beyond their traditional businesses into the financial markets. They have been accused of establishing links with brokerage firms in order to manipulate stock prices. The mobsters have also bought into companies, then demanded that managements buy them out at a fat premium, backing up their demands with physical threats -- Yakuza greenmail.
The emergence of the Yakuza in Tokyo's financial system is one important reason why Japan needs to get serious about controlling its markets, first through passage of new laws and then through rigid enforcement.
Prime Minister Kaifu has called for the creation of a U.S.-style Securities and Exchange Commission. While the SEC provides no guarantee against fraud or abuse, it is a solid first line of defense. The American Occupation did set one up, but the MoF abolished it in 1952 to consolidate its power over the markets. A new, independent Japanese SEC is a good idea.
FINALLY, Japan needs a big dose of the kind of competition that deregulation would bring -- both among Japanese firms and from outsiders. Who can be surprised that clients expect a kickback from brokers when they are forced to pay inflated commission rates?
So too, who can be surprised that Japan's big brokers have failed to develop into competitive worldclass firms? While feasting on high domestic commissions, they had no reason to.
Says the head of the Tokyo office of one Western brokerage firm: ''Japanese brokers are out of touch, out of date, and the trend is moving against them.'' A system of negotiated rates in Japan would force them to become more professional and competitive -- both at home and abroad.
The combination of less regulation and greater surveillance is the formula that Japan needs if it truly intends to modernize -- and clean up -- its financial industry.
U.S. lawmakers forgot the second part of the formula when they deregulated the savings and loan industry. Without stiff, objective surveillance, deregulation runs amok. If Japan takes any lesson from America's lead in financial deregulation, it should be that.
March 15, 2007
Hyatt gets OK to buy flagship
property in Waikiki
The Hyatt Regency Waikiki will be sold
to Hyatt Corp. for $445 million
By Kristen Consillio, Star-Bulletin
Hyatt Corp. got court approval yesterday to buy its flagship Waikiki hotel for $445 million from bankrupt Azabu Buildings Co. Ltd.
U.S. Bankruptcy Judge Robert Faris confirmed the sale of the Hyatt Regency Waikiki Resort & Spa to Hyatt, which has managed the property since it opened in 1974.
The sale includes the King's Village Shopping Center, which is owned by Azabu Buildings' wholly owned subsidiary, Azabu USA Corp. Azabu went into bankruptcy in February 2006.
Hyatt was the sole qualified bidder, having put down a $25 million deposit for the property as of the March 6 deadline for competing bids.
A second offer for $5.1 billion in cash or $9 billion in stock from Ade Ogunjobi, founder, chairman and CEO of TC Co./Toks Inc. was rejected by the court, which disqualified his bid because he couldn't post the required $25 million deposit.
Toks and Ogunjobi were sued by the U.S. Securities and Exchange Commission in August 2003 for offering fraudulent promissory notes over the Internet in a bid to raise billions of dollars to acquire more than a dozen of the world's largest corporations, though the company had no assets, sales or revenue.
In December 2003, Toks, which said it had relocated to Honolulu from Los Angeles, submitted a motion and application to acquire Hawaiian Holdings Inc., parent company of Hawaiian Airlines, through an exchange tender offer for $1 billion in stock and assumption of all of the airline's debt.
An auction set for yesterday was called off because there were no other qualified bids.
Hyatt is required to increase its deposit to $44.5 million, or 10 percent of the sales price, three business days after confirmation of the transaction.
Hyatt is taking control of the hotel by purchasing the stock of Azabu Buildings.
Meanwhile, Azabu and the committee of unsecured creditors have filed a suit against Azabu's Japan-based lender Chuo Mitsui Trust & Banking Co. Ltd., Waikiki First Finance Corp. and Waikiki S.F. Corp.
Waikiki First and Waikiki S.F. -- both owned by Honolulu-based Trinity Investments -- hold the first and second mortgages on the hotel, which total $330 million.
Azabu and the creditors assert that the lender's claims and the mortgages should either be rejected or reduced in priority. Chuo Mitsui's claims total $192 million.
Paul Alston, attorney for Chuo Mitsui and the two mortgage lenders that Trinity acquired, said his clients deny there is any merit to the claims made by Azabu and the creditor's committee.
Hyatt's general manager, Michael Jokovich, didn't return calls for comment yesterday.
"The property has substantial strategic value to Hyatt so the bid price is fairly aggressive," said tourism consultant Joseph Toy of Hospitality Advisors LLC. "Given its strategic value to Hyatt they certainly are willing to pay that premium."
http://starbulletin.com/2007/03/15/business/story02.html
March 4, 2005
Billionaire accused
of insider trading
Billionaire Japanese developer Yoshiaki Tsutsumi, once listed by Forbes as the world’s richest man, was arrested Thursday on allegations of insider trading and falsifying financial statements at his company.
Tsutsumi, 70, owns a major stake in Kokudo Corp., which controls Seibu Railway and its subsidiaries. He also owns Prince Hotels, Inc, the Seibu Lions professional baseball team and Seibu Construction Ltd.
He was arrested on suspicion of violating the securities and exchange law, the Tokyo District Prosecutors’ Office said.
Prosecutors took Tsutsumi to a Tokyo detention center for questioning.
$ $ $
March 25, 2005
Goldman Sachs offers to buy
Seibu Railway group for $8.5 billion
US investment bank Goldman Sachs has offered to buy the scandal-hit Seibu Railway group for about 900 billion yen ($8.5 billion dollars), a newspaper said.
Goldman Sachs has proposed purchasing Seibu Railway shares held by the group’s core company Kokudo and taking over Kokudo’s debt obligations, the Nihon Keizai Shimbun said, citing anonymous Seibu officials....
The group has been hit by a financial scandal.
Former Seibu railroad and hotel empire chief Yoshiaki Tsutsumi, once dubbed the world’s richest man, has been charged with falsifying financial statements to conceal his family control over the listed Seibu Railway.
He has also been indicted for insider trading after orchestrating the sale of shares in the now delisted railway firm before the concealment came to light.
The group’s reform panel was set to compile the final version of its reform plan centering around Kokudo’s absorption into Seibu Railway and a 200-billion-yen capital increase, the economic daily said.
The offer by Goldman Sachs would serve as an alternative to this plan, it said....
For more on Goldman Sachs, GO TO > > > Apollo Advisors; The Blackstone Group; Dirty Gold in Goldman Sachs; Dirty Money, Dirty Politics & Bishop Estate; Investigating Investcorp; Yakuza Doodle Dandies
$ $ $
March 8, 2005
Princeville Resort Sold for $161M
By Rick Daysog, Star-Bulletin
The Princeville Resort on Kauai is being sold for more than $161 million, according to a published report.
The Nikkei English News said the sale of the 9,000-acre resort to Morgan Stanley Real Estate Funds and a partnership headed by developer Jeff Stone will likely close this month.
Stone told the Star-Bulletin in July, when the deal was first announced, that the buyers plan to make substantial improvements to the resort....
Stone said in July that the buyers expect to retain the resort’s 600 employees as part of the sales agreement....
The sellers include Japan’s fourth-largest brewer, Suntory Ltd., which owns a 51 percent stake in the property; Mitsui & Co., which owns 24.5 percent; and Japanese developer Nippon Shinpan Co., which also owns 24.5 percent.
Suntory, which will receive about $80.8 million from the deal, plans to sell some of its noncore businesses and invest about $1.9 billion over the next three years to buy other beverage companies, Nikkei reported.
Mitusi and Nippon Shinpan acquired the resort in 1990 from developer Chris Skase’s Quintex Australia Ltd.
Suntory later purchased a 51 percent stake in the resort from Nippon Shinpan....
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For more on Princeville’s insurance broker, Marsh & McLennan, GO TO > > >
For more on Hawaii Prince Hotels President/CEO, George Ariyoshi, GO TO > > >
Woo vs. Harmon: Witness George Ariyoshi
And, for more on these flocking financial vultures, GO TO > > > Apollo Advisors; The Blackstone Group; Buzzards Of Paradise; Claims By Harmon; Dirty Money, Dirty Politics & Bishop Estate; Paradise Paved; Predators in Paradise; The Grand (and dirty) Ko Olina; RICO in Paradise; The Weinberg Foundation; Yakuza Doodle Dandies
Japan: Corruption Timeline
March 1993 – Shin Kanemaru, once considered Japan's most powerful politician, is jailed on charges of tax evasion. The arrest comes six months after Kanemaru, known for his fund-raising ability for the Liberal Democratic Party (LDP), pleads guilty to accepting US$4.6 million in illegal donations from a trucking company with links to organized crime. The scandal exposes the LDP's ties to Japan's criminal underworld, eroding public confidence in the party. Kanemaru died in 1996 while the case against him was still in progress.
July 1993 – Fifty-six legislators upset with corruption and eager for political reform leave the ruling LDP, which subsequently fails to win a majority in July elections and ends its nearly four-decade rule.
August 1993 – Morihiro Hosokawa, former LDP member and head of the Ministry of Finance, is elected prime minister by a new coalition government as the candidate of the center-right Japan New Party (JNP). Hosokawa vows that he will undertake political reforms to fight corruption by the end of the year.
September 1993 – The most powerful man in Japan's construction industry, Shimizu Corp. chairman Teruzo Yoshino, is arrested for allegedly paying a 10 million yen (US$95,000) bribe to a former provincial governor in order to get preferential treatment for public works contracts. Dozens of suspects had already been arrested during a year-long investigation into a pervasive system of collusion, kickbacks, and bribery among politicians, construction executives, and bureaucrats. Teruzo Yoshino was found guilty in 2000.
November 1993 – A principal architect of the new ruling coalition government, Ichiro Ozawa, is implicated in the mounting scandal involving the Japanese construction industry. Ozawa, a protégé of Kanemaru before defecting from the LDP, admits to accepting a US$46,000 cash contribution from a construction company the previous year.
January 1994 – Prime Minister Hosokawa passes his political reform package, but political opposition forces him to surrender one of his central goals—barring companies from making political donations.
March 1994 – With media helicopters broadcasting it live on national television, former LDP cabinet minister Kishiro Nakamura gives himself up to police for taking a US$95,000 bribe from a construction company. He is the first national politician arrested in the construction contract scandal.
April 1994 – Prime Minister Hosokawa resigns amid allegations that he accepted an illicit US$952,000 payment from a firm linked to organized crime. He is the fourth of the last five prime ministers to resign due to scandal. Foreign Minister Tsutomu Hata, leader of the Japan Renewal Party (Shinseito), becomes prime minister.
June 1994 – Prime Minister Hata resigns prior to certain defeat in a vote of no confidence by the Parliament. Socialist Party Chairman Tomiichi Murayama becomes Japan's third prime minister in 10 weeks. He is Japan's first socialist leader since 1948.
November 1995 – The United States expels Japan's Daiwa Bank after discovering that Toshihide Iguchi, the bank's former star bond trader, had altered records to hide US$1.1 billion in losses in its New York branch. The bank pleads guilty in February 1996 to concealing Iguchi's losses, resulting in a US$340 million fine and a ban on conducting business in the U.S. In April 1996, the former general manager of Daiwa's New York branch pleads guilty to aiding in the cover-up of the bank's losses. After pleading guilty in October 1996, Toshihide is sentenced in December to four years in prison and ordered to pay US$2.57 million in fines.
December 1995 – With Japan's banking system collapsing under billions of dollars in bad loans, the Ministry of Finance unveils an unpopular bailout plan to use US$6.5 billion in public funds to help offset debt owed to seven Japanese housing loan corporations, known as jusen. The estimated losses range from US$350 billion to US$800 billion. Ten percent of the bad loans are believed to be held by yakuza, Japan's organized criminal gangs, which traditionally co-opt banking officials to secure property deals, then refuse to repay their debts, making the government bailout a de facto debt forgiveness program for the criminal underworld. Because the jusen borrowed money for lending from other financial institutions, the collapse has spread throughout the industry. The banking crisis exposes the subtle relationships among Ministry of Finance officials, politicians, bankers, and organized crime. It has also brought into question the practice known as amakudari, or "descent from heaven," where former high-level government officials are given profitable senior positions in private companies with which their ministries had done business or even regulated. In October 1995, for example, 159 former Finance Ministry or Bank of Japan officials sat on the boards of Japan's 118 publicly traded banks.
January 1996 – As the Japanese banking system reels in scandal and the jusen bailout angers the public, Prime Minister Murayama resigns. Ryutaro Hashimoto, trade minister and head of the LDP, becomes prime minister.
July 1997 – Scandal taints Japan's "Big Four" securities firms of Nomura, Daiwa, Nikko, and Yamaichi, as well as a major commercial bank, Dai-Ichi Kangyo Bank, following revelations that the five companies channeled nearly US$100 million in illegal payments and questionable loans to extortionist Ryuichi Koike. Japanese racketeers, known as sokaiya, typically buy token shares in a company to gain entrance to stockholder meetings, then threaten to disrupt proceedings by divulging sensitive or embarrassing information about board members or their business decisions unless paid off. Sokaiya are also hired by corporations to keep rival sokaiya and troublemaking shareholders from disrupting their operations, as well as to act as intermediaries between corporations and the yakuza.
October 1997 – Top executives from Mitsubishi Motors resign after allegations of payoffs to sokaiya. Toshiba Corp. also admits to making payments to sokaiya for the last decade.
November 1997 – The Yamaichi Securities firm, one of the Big Four, announces a shutdown due to massive off-the-books debts totaling 264.8 billion yen.
December 1997 – Sokaiya Koike pleads guilty to taking 30 billion yen (about US$250 million) in payoffs and unsecured loans from Dai-Ichi Kangyo Bank and the Big Four securities firms. By the end of the year, 36 executives from the Big Four and Dai-Ichi Kangyo Bank are arrested and 77 company officials have resigned due to the sokaiya scandals.
January 1998 – Investigators from the Tokyo District Public Prosecutors Office raid the Ministry of Finance, arresting two top bank inspectors for allegedly accepting about US$40,000 in gifts from banks in exchange for advance warning of the ministry's "surprise" inspections. Finance Minister Hiroshi Mitsuzuka resigns over the scandal. Both bank inspectors are ultimately convicted for their roles in the affair.
February 1998 – Lawmaker Shokei Arai, under investigation for receiving illegal funds from officials at Nikko Securities Co., hangs himself in a Tokyo hotel room. Several other government officials under investigation in the recent scandals also committed suicide.
March 1998 – Officials from the Ministry of Finance and the Bank of Japan are arrested on suspicion of accepting expensive dinners and favors from businesses. Days later, prosecutors raid the offices of the Bank of Japan, arresting a senior bank official for allegedly accepting 7 million yen (US$33,000) in bribes from six banks in exchange for leaking inside information. The scandal prompts Bank of Japan governor Yasuo Matsushita to resign. Ultimately, Yasuyuki Yoshizawa, the Bank of Japan official arrested, is convicted of accepting bribes, and dozens of officials at the Ministry of Finance are reprimanded for taking favors from businesses. April 1998 – The Bank of Japan disciplines 98 of its officials in connection with the gift and bribery scandals. The Ministry of Finance punishes 112 officials due to the scandals, issuing penalties ranging from pay cuts to verbal warnings.
July 1998 – Already damaged by financial turmoil and corruption scandals, Prime Minister Ryutaro Hashimoto resigns after his LDP suffers heavy losses in Upper House parliamentary elections. Foreign Minister Keizo Obuchi is chosen by legislators to succeed Hashimoto as prime minister.
August 1999 – Both houses of Parliament unanimously pass Japan's first law on ethical standards for public servants. The law, which will take effect in April 2000, prohibits public servants from accepting gifts and entertainment from private companies under their jurisdiction and requires senior officials to report gifts or entertainment worth more than 5,000 yen. Certain high-ranking officials will also be required to report their income and stock transactions.
April 2000 – Prime Minister Obuchi suffers a stroke that leaves him in a coma. A handful of LDP powerbrokers known as the "Big Five" meet behind closed doors to officially choose Yoshiro Mori as a replacement.
July 2000 – Former Construction Minister Eiichi Nakao is arrested on suspicion of accepting nearly US$275,000 from a Tokyo construction company. Nakao is eventually convicted and sentenced to two years in prison. Shortly after Nakao's arrest, Kimitaka Kuze, a cabinet member and head of the Financial Reconstruction Commission, resigns after revelations that he accepted almost US$2.1 million from a major Japanese bank between 1989 and 1994.
November 2000 – An anti-graft law is passed. The law, which will go into effect in February 2001, bans politicians from accepting money or gifts in return for granting favors.
January 2001 – State Minister Fukushiro Nukaga resigns after admitting that he accepted 15 million yen (US$130,000) in improper contributions from KSD insurance company in 1999 and 2000. Nukaga, who was ousted over a procurement scandal as director general of the Defense Agency in 1998, is the third cabinet member to resign since unpopular Prime Minister Mori took office in April.
March 2001 – Masakuni Murakami, one of Japan's most powerful politicians and one of the LDP "Big Five" who installed Mori as prime minister, is arrested for allegedly accepting 72 million yen in bribes from KSD. Murakami is ultimately convicted of taking bribes.
April 2001 – Japan's first freedom of information law takes effect.
April 2001 – A year and a day after acceding to prime minister, Mori formally resigns. Casting himself as a reformer, Junichiro Koizumi of the LDP wins a two-tier parliamentary vote to become the 11th prime minister in 13 years. Koizumi pledges to end the tradition of collusion among businesses, politicians, and government employees.
November 2001 – Following a corruption investigation at Japan's Foreign Ministry, Foreign Minister Makiko Tanaka dismisses two diplomats and disciplines 326 others for using more than US$1.6 million in government money for personal spending over a 6½-year period.
January 2002 – Koizumi fires popular Foreign Minister Tanaka from his cabinet after a public battle with senior Foreign Ministry bureaucrats over her efforts to fight corruption in the ministry. Tanaka retains her seat in the lower house of Parliament.
March 2002 – Legislator Kiyomi Tsujimoto of the Social Democratic Party (SDP) reluctantly resigns after admitting that she used the name of another legislator's secretary to siphon state funds to her own personal account. She is arrested on fraud charges in July 2003 for stealing about 18.8 million yen and pleads guilty in November.
April 2002 – Upper House Speaker Yutaka Inoue resigns over allegations that his aide accepted 64 million yen (US$492,000) in kickbacks from a construction firm.Elsewhere, former LDP Secretary General Koichi Kato resigns from Parliament following allegations that he misused 90 million yen (US$703,000) and the arrest of his former top aide for tax evasion. Kato returns to politics and is re-elected to Parliament in November 2003.
June 2002 – Tanaka is suspended from the LDP after refusing to cooperate with an inquiry into allegations that she had misappropriated state funds.
July 2002 – Former LDP lawmaker Muneo Suzuki and his former aide are indicted for allegedly taking a combined total of 11 million yen (US$90,000) in bribes from a lumber company in 1997 and 1998. Suzuki, who had resigned from the LDP in March and was arrested in June, had previously served as chairman of the foreign affairs committee, a position which made him a virtual shadow foreign minister. Suzuki's trial was pending as of the end of March 2004; his aide, Akira Miyano, received a 16-month suspended sentence for his role in the affair.
July 2002 – The legislature enacts a bill to crack down on bid rigging in public procurements by central and local government officials. The bill empowers the Fair Trade Commission to demand that heads of ministries and local governments take preventative steps if they discover bid rigging by their staff members.
August 2002 – Tanaka resigns from Parliament amid allegations of using government funds to pay staff who were not on her official payroll. The many scandals surrounding Koizumi's government lead the Japanese media to dub his Parliament the "Scandal Parliament."
October 2002 – Democratic Party of Japan (DPJ) legislator and anti-corruption crusader Koki Ishii, is stabbed to death in front of his home. An ultra-right-wing extremist of Shukojuku (Save the Emperor) admits to the crime, the first political assassination since 1960.
March 2003 – Hounded by allegations of financial improprieties involving his former policy secretary, Minister of Agriculture, Forestry and Fisheries Tadamori Oshima resigns from his post but retains his seat in the legislature. Oshima's aide is accused of accepting a personal gift of 6 million yen (US$50,200) from a businessman.
March 2003 – Police arrest LDP lawmaker Takanori Sakai, his policy secretary, and a former secretary on suspicion of violating the Political Funds Control Law by failing to declare political donations from several companies. The arrests come after the lower house of Parliament votes to lift Sakai's immunity, and the LDP votes to expel him after he is taken into custody. Rather than resign, Sakai elects to not run for re-election in the November ballot. Their cases were pending as of March 2004.
October 2003 – Koizumi fires Haruho Fujii, president of the Japan Highway Corporation (JHC). With an annual discretionary budget of US$50 billion, the JHC is notorious as a corrupt sinkhole of taxpayer money, which is used for wasteful, redundant projects. Koizumi had sought to privatize the corporation to let a free market regulate it, while Fujii had fiercely resisted. Koizumi's minister of Land, Infrastructure and Transport had previously accused Fujii of lying to Parliament, eliminating reformers from his staff, and using accounting fraud to inflate the net worth of the JHC to US$364 billion. After being fired, Fujii threatens to retaliate by identifying high-level politicians and civil servants who he claims are corrupt.
November 2003 – In general elections, the opposition DPJ surges to pick up 40 seats in the lower house of Parliament, while Koizumi's LDP loses 10 seats. Experts link the defeat to public frustration concerning Koizumi's ineffectiveness at reforming the economy.
December 2003 – Two LDP lawmakers, Masanori Arai and Hiroshi Kondo, are arrested on suspicion of violating the Public Offices Elections Law by engaging in vote-buying during the November lower house election. Kondo resigns from the legislature later in the month, followed by Arai in January 2004. Both Kondo and Arai pleaded guilty to the charges against them in March 2004.
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From Deep Black Lies:
HIROHITO’S GOLD
Explosive Japanese WWII Secrets Revealed
By David Guyatt
The history of the war in the Pacific is lettered with tales of Japanese cruelty against British and American servicemen, amongst others.
Not only did Imperial Japanese forces treat Allied POW’s as slaves to build their railway in Burma, but also used them in horrific medical experiments at Mukden, Manchuria, the headquarters of the secretive Unit 731 – Japan’s chemical and biological warfare weapons facility.
Yet, even while all this was taking place, another more furtive Japanese force was engaged in work so secret that it has remained concealed, until now.
Operating under the command of a Royal prince of the Imperial household, a highly secret unit was tasked with the methodical plunder of Southeast Asia. The project was called “Golden Lily” – named after a poem written by Emperor Hirohito.
The unit plundered such profoundly large quantities of loot from China and Southeast Asia that, following the end of the war, the west determined to keep its activities secret. A mixture of fear, greed, and impending cold war and a vast complex of international corruption sat behind this decision.
Cynically forgotten were the horrific deaths of Allied POW’s who were forced to build complex tunnel systems and other underground depositories and then buried alive with the loot. One reason, perhaps, why history will record this as one of the most explosive stories of World War Two ever to be told.
American author, Sterling Seagrave, has previously received international acclaim for his penetrating investigative books: “The Soong Dynasty,” and “The Marcos Dynasty.” Now, in his latest work, “The Yamato Dynasty”, Seagrave unveils some of the most enduring secrets of the war in the Pacific....
As Sterling and Peggy Seagrave make clear, the ruling family of Japan has always been governed by others more powerful than themselves. The emperor and imperial family are figureheads used to conceal from the public the real power brokers who lurk behind the “black curtain.” These are the family owned and managed businesses or Zaibatsu that include such trans-national corporations as Mitsubishi, Mitsui and Sumitomo amongst others.
The authors say this corporate power has grown stronger, not weaker, and that the “postwar financial cliques share power with nobody. Not with the emperor, who is only a magic wand, and not with elected politicians, who are only hand-puppets. Financial cliques are the most powerful forces in modern Japan.” Moreover, Japan’s post-war business structure is unlike any other modern industrial society for the simple reason that organised crime are openly factored into it.
Hence the zaibatsu include not only “financiers, bankers and heads of corporations, but underworld bosses” – the so-called Yakuza crime clans.
The financial elite maintain their positions of power by paying bribes. In the same way that Japanese society is rigidly structured in certain key way, it should come as no surprise that political bribery and large scale corruption are also disciplined art-forms.
Political bribes are paid in “Bullets” with each shot amounting to 100 million Yen, equivalent to US$800,000. This enables the most powerful families to govern from a position of invisibility – a feature that had dominated the thoughts of Japan’s ruling elite throughout recent history....
A significant proportion of the current financial power of the zaibatsu and, indeed, that of the imperial family, has its origin in WWII.
For instance, Seagrave reveals that “Most zaibatsu had participated in the looting of conquered countries and helped in running the wartime drug trade on the mainland. An estimated $3 billion was made in the heroin trade alone...”
After the war, the vast wealth that had been accumulated from the heroin trade and from plundering China and other Southeast Asian nations magically disappeared. The result was that Allied military Supremo, General Douglas MacArthur accepted the position that Japan was ordered to pay in war reparations to a meagre $1 billion. From this, Allied Prisoners of War were paid trivial amounts in recompense for the inhumanities inflicted upon them during their internment. British POW’s were paid a miserable £48 each, for example....
The sheer quantity and value of plunder gathered by the Golden Lily was mind numbing. The whole of Asia under Japanese control had been combed for treasure. Most of it was shipped to Prince Chichibu’s headquarters in the Philippines....
After the war had finished, Japanese led groups began to recover large amounts of treasure hidden in the Philippines. They were not alone. Seagrave reveals that American OSS (forerunner of the CIA) agents watched as Japanese troops buried treasure at Luzon in the Philippines and began a clandestine recovery operation between 1945 and 1948.
This was headed by a Filipino-American OSS - and later CIA - officer, Severino Garcia Santa Romana. Romana, in turn, worked under the watchful eye of the late and now infamous CIA operative, General Edward Lansdale - who was embroiled in Operation Mongoose and the abortive CIA invasion of Cuba during the Kennedy administration.
There was no intention on the part of the OSS/CIA to return any of the plunder to the rightful owners. Instead, Santa Romana set up numerous front companies to launder the gold bullion secretly recovered.
In all OSS/CIA gold bullion was secretly deposited in a total of 176 bank accounts located in 42 countries.
Nor was this a rogue operation conducted by a knowing few. The authors reveal that General William Donovan, head of the OSS, knew of the Lansdale-Romana recoveries, as did General Douglas MacArthur, and former US President Herbert Hoover. Knowledge also extended to cold war warrior and later head of the CIA, Allen Dulles. Seagrave also believes it likely that President Truman was in the charmed circle of those who were informed.
The twice-looted gold became “the basis of the CIA’s ‘off the books’ operational funds during the immediate postwar years, to create a worldwide anti-communist network.”
To ensure loyalty to the cause, the CIA distributed Gold Bullion Certificates to influential and well-known people throughout the world. The authors hold documents showing that “one of the big gold bullion accounts set up by Santa Romana was in the name of General Douglas MacArthur.”
Other documents indicate that gold bullion worth $100 million was placed in an account in the name of Herbert Hoover, former President of the United States.
Meanwhile, Allied veterans of the war in the Pacific continue to fight for meaningful compensation for the barbarous treatment they experienced. The $1 billion reparations paid by Japan, once it had been divided among the many millions entitled to compensation, amounted to a pittance.
As late as November 1998, a Tokyo court rejected an appeal from 20,000 British, Australian, New Zealand and American former internees who had asked for compensation of $22,000 each.
In contrast to this miserly sum paid to Allied POW’s, leading Japanese zaibatsu submitted their own claims for compensation after the war, arguing that the damage inflicted on their armaments factories by Allied air raids required restitution.
These claims totaled $5 billion and many were paid....
March 25, 2005