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Japanese Extortionists Target Corporate Meetings

Previously accepted extortionist tactics at annual shareholder meetings have turned violent as sokaiya ally themselves more closely with organized gangsters

THE huge East Japan Railway Corporation, better known as ``JR East,'' recently held its annual meeting in a large Tokyo hotel. But any hotel guest surely would have thought he had stumbled into a convention of police officers and security agents.

One could hardly blame JR East for such tight security. In recent months, the press, citing police sources, has sounded more strident about the threat posed by uniquely Japanese corporate extortionists called sokaiya.

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The word comes from the Japanese for ``general meeting,'' and the sokaiya are notorious for threatening to disrupt the harmony of annual shareholders' gatherings if they are not paid off. For decades, few corporations have refused the offer.

Suddenly, the sokaiya have apparently turned violent. Police point to 18 allegedly sokaiya-related attacks against executives in two years, most unsolved.

This February, a Fuji Film Company executive responsible for his company's relations with sokaiya was killed outside his suburban home. Police say sokaiya were responsible, but they have yet to make an arrest.

Early summer is one of Japan's two annual-meeting seasons, and recently, the police have mounted an impressive anti-sokaiya crackdown. On June 29, when almost 2,000 companies held their meetings, police dispatched more than 10,000 officers to keep the peace.

Corporate Japan has enough to worry about these days - notably an enduring recession and the rising value of the yen, which is stifling hopes for an economic recovery. But for a variety of reasons, Japanese executives are now forced to add sokaiya violence to their list of concerns.

One factor, experts say, is that distinctions between sokaiya and Japan's organized gangsters, the yakuza, have grown fuzzier in recent years. Where sokaiya were once small-time extortionists who also did corporate dirty work, they are now more allied with the tougher, more violent yakuza.

The companies are not entirely blameless, however. A former National Police Agency (NPA) official says it is naive to conclude that the sokaiya have simply become more violent; he argues that the corporations are paying the price for connections they established with yakuza during the boom economy of the late 1980s.

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One source with ties to sokaiya and yakuza says part of the hype is police-driven. He asserts that police have their own interests at heart when they warn of sokaiya violence - they want corporations to hire retiring officers as anti-sokaiya consultants.

Sokaiya are most famous for their bullying presence at shareholder meetings, but broader connections exist between these self-styled ``consultants'' and company executives. Since before World War II, they have served corporations and threatened them.

The source with connections to sokaiya and yakuza says companies initially opted to retain services of sokaiya in order to ensure ``smooth shareholder relations.'' These activities included keeping dissident shareholders quiet, intimidating union organizers, and generally encouraging a kind of harmony that verges on forced obedience.

``In my opinion,'' this man says, ``the sokaiya just reflect the immature side of Japanese capitalism.''

No Japanese law explicitly banned sokaiya activities until a statute was passed by parliament in 1982. Former NPA official Raisuke Miyawaki, who helped draft the statute, says the ensuing enforcement was initially effective. The number of sokaiya dropped from an estimated 6,500 to around 1,000.

But since then, two things have happened to make the sokaiya brand of extortion more of a threat. During the ``bubble economy'' of the late 1980s, when land prices in Japan went into orbit, companies began to work with yakuza to clear recalcitrant tenants off desirable property and to drive up real estate prices. Mr. Miyawaki says those contacts have given yakuza a wealth of potentially embarrassing and exploitable information about the companies they serve.

In 1992, parliament passed another law, this time clamping down on many traditional yakuza businesses. The anti-gangster law, several experts say, forced the yakuza into new lines of business, including the sokaiya brand of extortion.

``The biggest problem with sokaiya,'' says Hideaki Kubori, a Tokyo lawyer who advises corporations on how to oppose the extortionists, ``is that they have a close relationship with yakuza, and that they are used by yakuza as the front line ... to invade Japanese corporations.''

A series of arrests last August showed that the sokaiya problem was back with a vengeance. Police charged four executives of the Kirin Brewery Company with paying sokaiya 46.6 million yen (about $420,000). Forty-two sokaiya were also arrested.

It is widely known that corporate ties with sokaiya run so deep that it makes it hard for police to enforce the law.

Even Mr. Kubori says one-fifth of the 100 firms he advises have chosen to maintain their ties with the extortionists, because the companies figure that they have more to lose by alienating the sokaiya than by risking a police investigation.

Companies are afraid of what the gangsters know about them, Miyawaki says. ``In this situation, police have a very difficult time.''

But police also come in for some criticism. The source with sokaiya contacts questions the level of public concern that has been generated recently, suggesting that the ``police have their own reasons.'' He asserts that retired officials are finding second careers with companies needing advice on how to combat sokaiya.

A police official rejects the implication, acknowledging that some officials do go on to corporate posts but that the current concern is media-generated.

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