Sokaiya
Encyclopedia
, are a form of specialized racketeer unique to Japan
, and often associated with the yakuza
that extort
money from or blackmail
companies by threatening to publicly humiliate
companies and their management, usually in their .
, where Chisso
managed to close a number of annual meetings within minutes even though hundreds of protesters wanted to voice their anger. In that respect, they have even been compared to corporate lawyer
s in America.
While yakuza were involved in the business early on, only in the late 1960s did they start to change the business relationship from protection to extortion. Police confiscations related to extortion were ¥900 million, greater than any other yakuza business.
In 1984, the law made first steps to reduce the threat from sōkaiya by establishing a minimum number of holdings (¥50,000) in order to be allowed into the shareholder meeting, leading to a slow decline of the number of sōkaiya. In response to this, the sōkaiya formed fake uyoku dantai
, announcing embarrassing company secrets, fictional or not, from loudspeakers mounted on trucks in order to extort money from companies.
In 1994, Juntarō Suzuki, vice president of Fujifilm
, was murdered by sōkaiya after he stopped paying these bribes.
Modern sōkaiya have developed other, similar methods to accomplish their goals. One example is the banzai sōkaiya, who disrupt business places with their cries of "Banzai
!" and praise of the Emperor
until they are quietly paid to leave.
, where Chisso
managed to close a number of annual meetings within minutes even though hundreds of protesters wanted to voice their anger. However, they have also been active against anti-war protesters and other potential troublemakers.
A practical countermeasure used by large corporations is to hold all shareholder meetings on the same day, reducing the risk of exposure to sōkaiya.
in the Japanese market the business environment for sōkaiya is getting more and more difficult.
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, and often associated with the yakuza
Yakuza
, also known as , are members of traditional organized crime syndicates in Japan. The Japanese police, and media by request of the police, call them bōryokudan , literally "violence group", while the yakuza call themselves "ninkyō dantai" , "chivalrous organizations". The yakuza are notoriously...
that extort
Extortion
Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...
money from or blackmail
Blackmail
In common usage, blackmail is a crime involving threats to reveal substantially true or false information about a person to the public, a family member, or associates unless a demand is met. It may be defined as coercion involving threats of physical harm, threat of criminal prosecution, or threats...
companies by threatening to publicly humiliate
Humiliation
Humiliation is the abasement of pride, which creates mortification or leads to a state of being humbled or reduced to lowliness or submission. It can be brought about through bullying, intimidation, physical or mental mistreatment or trickery, or by embarrassment if a person is revealed to have...
companies and their management, usually in their .
History
Sōkaiya originate from the late 19th century. At this time, the unlimited liability of the management put the managers' personal fortune at risk in case of rumors and scandals. Hence the management hired protection, called sōkaiya, to reduce the risk of such rumors. Even after the Japanese laws included a limited liability, hence reducing the personal risk to the managers, these sōkaiya continued to prosper, and were often used to quiet down otherwise difficult meetings. One infamous case is related to the Minamata diseaseMinamata disease
', sometimes referred to as , is a neurological syndrome caused by severe mercury poisoning. Symptoms include ataxia, numbness in the hands and feet, general muscle weakness, narrowing of the field of vision and damage to hearing and speech. In extreme cases, insanity, paralysis, coma, and death...
, where Chisso
Chisso
The is a Japanese chemical company. It is particularly well known as a supplier of liquid crystal used for LCD displays.Chisso is also known for its thirty-four year long contamination of the water supply in Minamata, Japan that led to thousands of deaths and victims of disease...
managed to close a number of annual meetings within minutes even though hundreds of protesters wanted to voice their anger. In that respect, they have even been compared to corporate lawyer
Corporate lawyer
A corporate lawyer is a lawyer who specializes in corporations law.As of 2004, there were 67,000 corporate lawyers in the United States, working on average for 50 hours per week, with a mean starting salary of USD64,000, rising to USD93,700 after 5 years and USD139,000 after 10–15 years.The...
s in America.
While yakuza were involved in the business early on, only in the late 1960s did they start to change the business relationship from protection to extortion. Police confiscations related to extortion were ¥900 million, greater than any other yakuza business.
In 1984, the law made first steps to reduce the threat from sōkaiya by establishing a minimum number of holdings (¥50,000) in order to be allowed into the shareholder meeting, leading to a slow decline of the number of sōkaiya. In response to this, the sōkaiya formed fake uyoku dantai
Uyoku dantai
Uyoku dantai are Japanese nationalist right-wing groups.In 1996, the National Police Agency estimated that there are over 1000 right wing groups in Japan with about 100,000 members in total.-Tennō period:...
, announcing embarrassing company secrets, fictional or not, from loudspeakers mounted on trucks in order to extort money from companies.
In 1994, Juntarō Suzuki, vice president of Fujifilm
Fujifilm
is a multinational photography and imaging company headquartered in Tokyo, Japan.Fujifilm's principal activities are the development, production, sale and servicing of color photographic film, digital cameras, photofinishing equipment, color paper, photofinishing chemicals, medical imaging...
, was murdered by sōkaiya after he stopped paying these bribes.
Disrupting shareholder meetings
Individuals acquire enough stock from multiple companies in order to gain entrance to a shareholders' meeting. There, they disrupt the meeting (and embarrass the company) until their demands are met. For this, the sōkaiya often research the company in detail beforehand to uncover incidents of misconduct or other company secrets, and then blackmail the management so that these issues are not raised in the shareholder meeting or elsewhere. Often, they also invent fictional issues that the company would have a difficult time disproving.Modern sōkaiya have developed other, similar methods to accomplish their goals. One example is the banzai sōkaiya, who disrupt business places with their cries of "Banzai
Ten thousand years
The use of the phrase "ten thousand years" in various East Asian languages originated in ancient China as an expression used to wish long life to the Emperor, and is typically translated as "long live" in English...
!" and praise of the Emperor
Emperor of Japan
The Emperor of Japan is, according to the 1947 Constitution of Japan, "the symbol of the state and of the unity of the people." He is a ceremonial figurehead under a form of constitutional monarchy and is head of the Japanese Imperial Family with functions as head of state. He is also the highest...
until they are quietly paid to leave.
Other disruption
Sōkaiya also form fake right wing groups, announcing embarrassing company secrets, fictional or not, from loudspeakers mounted on trucks in order to extort money from companies. They may also print special newspapers with topics embarrassing to companies, and then ask the company to buy the entire print at inflated prices, or even to subscribe to these newspapers, generating a steady flow of cash.Preventing disruption of shareholder meetings
Sōkaiya have also been used by companies to drown out questions from legitimate shareholders that company officials do not want presented. One infamous case is related to the Minamata diseaseMinamata disease
', sometimes referred to as , is a neurological syndrome caused by severe mercury poisoning. Symptoms include ataxia, numbness in the hands and feet, general muscle weakness, narrowing of the field of vision and damage to hearing and speech. In extreme cases, insanity, paralysis, coma, and death...
, where Chisso
Chisso
The is a Japanese chemical company. It is particularly well known as a supplier of liquid crystal used for LCD displays.Chisso is also known for its thirty-four year long contamination of the water supply in Minamata, Japan that led to thousands of deaths and victims of disease...
managed to close a number of annual meetings within minutes even though hundreds of protesters wanted to voice their anger. However, they have also been active against anti-war protesters and other potential troublemakers.
Countermeasures
Article 968 of the Japanese corporations code prohibits sōkaiya activity, imposing imprisonment of no more than five years or a fine of no more than ¥5 million for "receiving, demanding or promising a proprietary benefit with regard to" statements or the exercise of voting rights at a shareholder or creditor meeting.A practical countermeasure used by large corporations is to hold all shareholder meetings on the same day, reducing the risk of exposure to sōkaiya.
Background
While in the west a shareholders' meeting is usually an earnest discussion between the shareholders and the management, in Japan it is often more of a ceremony, and the management does not feel the need to truly inform shareholders. In this atmosphere, the sōkaiya are able to prosper. However, the trend for more deregulationDeregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
in the Japanese market the business environment for sōkaiya is getting more and more difficult.
Companies that have bribed sōkaiya
Major companies that have been found guilty of employing sōkaiya include but are not limited to:- MitsubishiMitsubishiThe Mitsubishi Group , Mitsubishi Group of Companies, or Mitsubishi Companies is a Japanese multinational conglomerate company that consists of a range of autonomous businesses which share the Mitsubishi brand, trademark and legacy...
, including a number of arrests - Daiwa Securities GroupDaiwa Securities Groupis Japan's second largest securities brokerage after Nomura Securities Co..Major group members include Daiwa Securities Co.Ltd., which offers retail services such as online trading to individual investors and Daiwa Securities Capital Markets Co.Ltd...
- Nikko SecuritiesNikko Cordialwas a third largest Japanese brokerage firm and the holding company for Nikko Cordial Securities and subsidiaries. In 2008, Nikko Cordial Corporation became a wholly owned subsidiary of Citigroup Inc., upon completion of share exchange and it merged with Citigroup Japan Holdings Ltd. to form Nikko...
- Nomura Securities Co.Nomura Securities Co.is a wholly owned subsidiary of Nomura Holdings, Inc. , which forms part of the Nomura Group. It plays a central role in the securities business, the Group's core business. Nomura is a financial services group and global investment bank. Based in Tokyo and with regional headquarters in Hong Kong,...
, with three top executive pleading guilty for multi-million dollar payments. In this case, the sōkaiya actually owned enough stock to propose one of their choosing as a member for the board of directorsBoard of directorsA board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
. After the scandal came to light, the entire board resigned. - Nippon ShinpanNippon ShinpanMitsubishi UFJ NICOS Co., Ltd., formerly name Nippon Shinpan, is a Japanese company. It was established in 1951 and became Japan's first and largest credit company during the post-World War Japanese economic boom....
, forcing the president Yoji Yamada into retirement after various executives paid up to ¥80 million (approx. US$850,000) to the subsequently arrested Kikuo Kondo of the Sumiyoshi-kaiSumiyoshi-kaiThe , sometimes referred to as the , is the second-largest yakuza group in Japan with an estimated 20,000 members.The Sumiyoshi-kai is a confederation of smaller gangs. Its current sosai, or president, is Shigeo Nishiguchi. Structurally, the Sumiyoshi-kai differs from its main rival, the...
, although police reports only ¥28.35 million. - Dai-Ichi KangyoDKB GroupThe or the Dai-Ichi Kangyo Group is the largest Japanese keiretsu.The group emerged after World War II and coalesced around the Dai-Ichi Kangyo Bank. The group's presidents began meeting regularly in 1971. Also that year the group's name developed from the merger of Dai-Ichi Bank and Nippon...
- The Tokyo Electric Power CompanyThe Tokyo Electric Power Company, also known as or TEPCO, is an electric utility servicing Japan's Kantō region, Yamanashi Prefecture, and the eastern portion of Shizuoka Prefecture. This area includes Tokyo...
- Meiji SeikaMeiji Seikais the trade name of a pharmaceutical company in Japan, , until March 31, 2011.It was the confectionery and pharmaceutical company that manufactures a wide range of products including Hello Panda and Yan Yan...
Further reading
- Baldwin, Frank, Sōkaiya, the Idiom of Contemporary Japan, "Japan Interpreter", 8, Winter 1974
- Ogino, Hiroshi, The Sōkaiya's Grip on Corporate Japan, JQ, July–September, 1997
- Szymkowiak, Kenneth, F., Sōkaiya Criminal Group and the Conflict for Corporate Power in Postwar Japan, "Asia Profile", Vol. 20, No.4, August, 1992
- Szymkowiak, Kenneth, F., Sōkaiya: An Examination of the Social and Legal Devoloupmet of Japan's Corporate Extortionist, "International Journal of the Sociology of Law", Vol. 22, 1994
- Szymkowiak, Kenneth (2002). Sokaiya: Extortion, Protection, and the Japanese Corporation. East Gate Book. ISBN 978-0765607805.
External links
- Japan faces fresh scandal, cnn.com, March 11, 1997
- 'Sokaiya' scams hit Japan, cnn.com, December 19, 1997
- Executive quits over gangster charges, BBC News, 21 November 2002
- Japan reels from Sokaiya scam, Evening Standard, 3 December 2002