A Nuclear Respite In Japan; The Buddha Of Fukushima Comes To Tokyo

“Look around you. Do you think Tokyo needs nuclear electricity?” Naoto Matsumura, observing Tokyo life in Yurakucho, one day after all the nuclear power stations have been shut down in Japan, temporarily.

Japan’s last operating nuclear power plant reactor went off yesterday, but only for maintenance. Japan had 54 reactors before the Fukushima Daiichi power plant accident last year. This weekend Tomari nuclear power plant in Hokkaido shut down and  Japan is running without nuclear energy for the first time in 42 years.

The Washington Post reported some anti-nuclear power demonstration in Tokyo on Saturday, which coincided with Children’s Day. The traditional 鯉のぼり/koi nobori, carps flying in the air, on the Children’s Day,  became the symbol of the anti-nuclear movement.

Naoto Matsumura, the well-known farmer, who stood alone against the government’s decision last year to evacuate the cities situated within the 20km zone around the Fukushima Daiichi nuclear power plant, because the fauna in that zone would go out of control, visited Tokyo on Saturday and Sunday. The purpose of his visit was to participate in  a fund rising event in Yokosuka for the Fukushima animals.

Naoto Matsumura and his friend Mr. Kaneko said at a press conference in Tokyo last February that they were actively trying to set up an NGO to look after the abandoned farm animals or residents’ pets. After three months of struggle, Mr. Matsumura said that his NGO called “Ganbaru Fukushima” (“がんばる福島”) got approved  by The Civil Society Support Center of Yokohama very recently, and will be officially starting out on May 11th 2012. “It is almost 90% sure that they will approve our activities, but the official starting date will be on May 11th”, he said today. The NGO’s leader is Naoto Matsumura, and the vice-presidents are Mr. Kenji Kaneko, together with professor Yamashita, from JAXA. Under the three leaders of the new group, there are an additional 10 people from various backgrounds supporting Ganbaru Fukushima’s activities.

Naoto Matsumura, on his way home to Koriyama this evening, the closest city to Tomioka Town where he lives, paid a visit to TEPCO headquarters near Shinbashi station, in Tokyo. As he was staring at the buildings, he recalled all the times when he went there to ask the leaders to shut down all their nuclear power plants. On Saturday, it became reality. Matsumura on his way to Tokyo station said: “Look around you. Does Tokyo need nuclear electricity? Is the city in darkness?”

Naoto Matsumura at Tokyo TEPCO headquarters, near Shinbashi station one day after all the nuclear power plants shut down in Japan.

And he quietly walked from TEPCO headquarters to Tokyo station to take a bullet train back to Fukushima.

Naoto Matsumura spent two days in Tokyo. He went back home on a Sunday evening. He said: "I will stay in Tomioka town until its soil will be completely decontaminated."

Types of yakuza and their businesses

atariya (当たり屋・あたりや)professional car crash dummy

con man who specializes in throwing himself in front of cars and collecting damages from either the driver or the driver’s insurance company. A dangerous hard-hitting job but one that does leave an impact on society—or automobiles.

bakuto (博徒・ばくと)、gambler

Often considered the first kind of yakuza. Groups of gamblers who traversed the highways of feudal japan.  Finger-cutting, tattoing, and the yakuza’s policy of cooperation with the police are practices that were started by the bakuto.

boryokudan (暴力団・ぼうりょくだん)、violence groups

Used by the police to refer to organized crime groups.

bosozoku (暴走族・ ぼうそうぞく)、motorcycle gangs

Structured groups of young bikers, who are  responsible for a great percentage of the juvenile crime in Japan. Comprised mostly of teens who drop-out from the competitive Japanese high-schools and find themselves without many other options in the Japanese job market. Almost one-third are ultimately recruited to join the yakuza.

burakumin (部落民・ぶらくみん)、’small settlement people’

Descendents of an outcasted class from the feudal era. Burakumin held jobs considered to be unclean, or related to death. Although this has changed some over the years, they are still often discriminated against and are therefore prime recruits for the yakuza.  Though estimates vary, a third of the general yakuza population is thought to be burakumin.

furyo (不良・ふりょう)no good; defective product

The word 不良 is most often used in 不良少年 (furyoshonen) or juvenile delinquent, but when used alone in the Kanto area, it refers to the yakuza. Yakuza often call other yakuza (in Kanto area) furyo. The word is sometimes used in front of civilians so that they don’t understand yakuza are being discussed.

gurentai (愚連隊・ぐれんたい) 、hoodlums

Predecessors of the modern yakuza. Though they are one of the original groups of yakuza, unlike the bakuto or the tekiya, they employed very violent means. Capitalizing on the the moral and economic depravity that followed World War II, these groups grew in number quickly. They were quite profitable, shaking down restaurants and other service industry-related businesses through threats and extortion.

jiageya(地上げ屋・ちあげや)、 land sharks, loan sharks

Eviction companies run by the yakuza to force tenants off their land in order to sell larger plots of land for a greater profit. Jiageya would drive out occupants by creating disturbances or damaging property around the target (driving into cars, playing loud music at night) and sometimes even setting the house on fire.  Just one job could be extremely lucrative; during the bubble period, this was the greatest single source of income for the yakuza. The start of the ‘keizai yakuza’.

jisageya (地下げ屋・じさげや)real estate price wreckers

A spiritual brother to the jiageya, jisageya are usually yakuza hired to live in an area driving down real estate prices so that unscrupulous real estate agents can buy land or homes there at a discount. Usually they are partnered with the real-estate agent. Sometimes, the yakuza leave as soon as their real estate agent or developer has purchased the property. After a few months, the property values may raise again, allowing the owner to sell off the property at a profit.

jikenya (事件屋・じけんや)、incident specialists

As an alternative to going to court, these yakuza are hired to help resolve issues ranging from traffic incidents to contract disputes. Going through the Japanese legal system is time-consuming, costly, and often ineffective. Therefore, many Japanese citizens using the yakuza for these kinds of services, and with an attitude of resignation, often report little reservation.

sangokujin (三国人・さんごくじん) 、‘people from 3 countries’

Refers to the groups of Chinese, Koreans, and Taiwanese who were brought in to remedy the dearth of Japanese workers during the war years. They often clashed with the yakuza for control of the black markets after the war. Approximately a third of yakuza today are of Korean ancestry.

seiriya (整理屋・せいりや)、loan shark

A loan shark who handles messy contracts involving money disputes: bankruptcies, loans, debt collection. Very similar to Jikenya.

sokaiya (総会屋・そうかいや)、 corporate extortionists, racketeers

Professional extortionists who often pull in huge profits. Traditionally, sokaiya would do extensive research on a company to uncover their secrets, buy enough stocks to enter the annual shareholders meetings, and blackmail the company by threatening to spread the rumors. Eventually laws were made prohibiting this kind of activity, and so sokaiya today are paid off in more subtle ways.

songiriya (損切り屋・そんぎりや)、loss-cutting specialist

Another kind of ‘specialist`, similar to the Jiageya – extortionists working in the real estate business who would create false liens against residences and then demand payments. General real estate scams.

tekiya (的屋・てきや)、street-stall operators, peddlers

Along with the bakuto and the gurentai, one of the three original kinds of yakuza. They worked at trading centers or fairs, selling products of dubious quality or value; for example, they would sell miniature bonsai trees that didn’t have any roots, or lie about the origin of a product. Many of the burakumin became tekiya, as a way out of otherwise inevitable poverty and disgrace. Japan’s most beloved film character, the clumsy street merchant and tramp, Tora-san (寅さん), is a tekiya.

yakuza (やくざ)、traditional term for Japanese mobsters

Literally, `8-9-3’, the hand that will lead to a score of 0 in a traditional Japanese card game. Comes from their original role as gamblers, bakuto, in feudal japan.

Yakuza Terminology: Updated With Weasels and Monsters

We’ve updated the yakuza terminology section here and there. If you’re interested in the Japanese underworld and anti-social forces, have a read. Brush up on the Japanese you shouldn’t know. By the way, if someone knows how to play itachi-gokko the correct way (like young kids used to play it), please teach me how. It sounds sort of fun.

itachi (鼬・いたち): a weasel, but in the yakuza world also slang for a very good police detective. いたちごっこ(itachgokko) “to act like a weasel” refers to a game that Japanese children play in which it is impossible for either side to win. The police versus the yakuza war which has been going on since 1965 is often referred to as itachigokko.

bakecho (化け調・ばけちょう): A shady private investigation firm, or a supposed corporate investigation that is carried out under fraudulent pretenses or with the goal of blackmailing the target, and/or illegally obtaining information for the yakuza or other anti-social forces. Private investigation firms are often used as front companies for the yakuza, and since they also collect information, they are wonderful vehicles for collecting intelligence to extort money from people or silence investigators. Recently (February 2012)  the Private Investigation firm,  Galu Agency, which has 150 offices nationwide in Japan, had their  Yokohama bureau chief convicted for fraudulently obtaining the personal records of an organized crime cop—on behalf of the Yamaguchi-gumi Kodo-kai. Yakuza Private Eye–it’s a scary combination.

Private Investigation Agencies are popular front companies for the yakuza. The companies and/or their operations/investigations are sometimes called 化け調, from 化ける/bakeru (to become a monster) and 調査 (chosa)to investigate. Illustration by @marikurisato

 

For even more  yakuza slang, press here with your remaining fingers.

 

Independent Commission on Nuclear Accident: Earthquake, TEPCO negligence, Myth of Safety Caused Meltdown

On March 1st, the Fukushima Nuclear Accident Independent Investigation Commission, established in September 2011 by the Rebuild Japan Initiative Foundation, lead by Koichi Kitazawa, former president of Japan Science and Technology Agency, held a press conference on their recently issued report. The commission is a civilian project staffed by nuclear experts, investigative journalists, and experts in risk management.

The Fukushima Nuclear Accident Independent Investigation Committee press conference. Mr. Kitazawa (center) Mr. Funabashi (far left)

We have summarized the press conference and the report for our readers. During the press conference, the committee stated that there was solid evidence to suggest that the earthquake caused enough damage to the Fukushima nuclear power plant to create the meltdown and that the tsunami was a secondary factor. This conclusion flies in the face of the government and Tokyo Electric Power Company (TEPCO) claims that an unprecedented tidal wave was responsible for the disaster rather than the earthquake.

The committee found that there was not only a problem in the reactors of Fukushima Dai-Ichi plant, but that the pools that store the spent fuel “were one of the biggest source of possible radioactive leakage.” The other main problem during the crisis management was the lack of information sharing and coordination inside the government offices, and also the failure of international communication with regard to the dumping of contaminated seawater into the ocean. The Japanese tatewari hierarchal systems of the Japanese government offices had been disclosed to the whole world.

“National Psychological Spiral”

This report did not only cover the direct or indirect causes of the accident, but also the socio-historical part of the cause.

The report pointed out that the situation in Japan with regard to nuclear power is very “poorly prepared to accidents.” A “psychological spiral” may have lead Japan into having arrogant self-confidence in nuclear energy. “All the people who worked or still work in the nuclear industry” felt that “there was something wrong in what they were doing”, but failed to report it.

As a scientist, Mr. Koichi Kitazawa, the chairman of the panel and Former President of Japan Science and Technology Agency (JST), feels that the nuclear power reactors in Japan are “too crowded” on the same site. Because of this “crowded distribution of radioactivity sources”, the accident developed in the way that “each of the radioactive sources interacted with each other” and therefore amplified the scale of the accident.

The report also pointed out that, the people who knew about the meltdown knew that “the most dangerous part of the plant was not just the reactors, but also the pools where the spent fuel is stored”. “The spent fuel pools were one of the biggest source of possible radioactive leak”, but this time “fortunately” the leak from these pools could be avoided in time. However, this “luck” cannot be guaranteed in the future.

TEPCO Requested Retreat from the Accident Site

During the most critical times of the accident, between March 14th and 16th, TEPCO had requested former PM Naoto Kan’s office to pull out the group of workers operating on the Fukushima Daiichi power station accident site. The president of TEPCO called the people who were closely working with the PM asking them to convince the PM to let them evacuate their employees. But PM Naoto Kan and his advisors did not permit TEPCO to retreat. In total, about 600 people retreated from the accident site, but the so-called Fukushima Fifty were left behind to work inside the nuclear power station to avoid the accident to go out of control.

According to the investigation of this panel commission, perhaps the greatest achievements of Mister Kan could be that he “was able to prevent TEPCO to retreat entirely from the Daiichi site.” In other words, while Prime Minister Naoto Kan was a hot-headed jerk, his decisiveness and ability to threaten and intimidate TEPCO into not abandoning ship,  like a bunch of rats, was decisive in preventing an even greater nuclear disaster.

However, the excessive involvement of the PM’s office to the crisis management was “more than necessary” and turned out to be “not really effective.” The reason for this involvement was because “the presence of the Nuclear and Industrial Safety Agency of Japan and the Nuclear Safety Commission of Japan was so dilute and insufficient”. The PM’s office was not able to gather enough information from these organizations and “gradually became suspicious about the efficiency” of the bureaucrats and those involved in the accident management. This has led the PM to go directly to the accident site.

The report concludes that the reason why the accident was on an epic scale was because of the “lack of a sense of responsibility and professional negligence on safety issues of TEPCO and of the government.”

The world is supposed to have accumulated much improvement in terms of security issues in nuclear power plants after the accidents of Three Miles Island and Chernobyl. However Japan has not been able to use the world’s experience in nuclear disaster. Ambassador Tetsuya Endo, member of the committee and former chairman of the Board of Governors said that the main problem in Japan is the lack of the information sharing during the crisis management and the “arrogant” self confidence of the Japanese nuclear energy industry accumulated since the 1960’s which led Japan “not to pay enough attention from the recommendations coming from abroad, including from the International Atomic Energy Agency (IAEA).”

“Negligence in the last 20 years has led Japan to become a place not safe enough for using nuclear energy.”

 The reasons why Japan did not accept the recommendation from the other countries about the safety issue, according to the investigation, is believed to be the “self trapped situation” of the people related to regulation from which a nuclear power generation trapped in the so-called “miss in absolute safety.” This is why the safety issue did not reach a higher level in Japan.

In other words, the words “improvement in safety issues” has even become almost “taboo” in the manufacturing companies of nuclear power plant and for electric power companies. In their logic, believing that nuclear energy is “100% safe”, there was no room for “improvement.”

Preparedness to a Nuclear Accident for Nuclear Power Generation

As for the people related to the regulatory side or the promotion of nuclear energy, according to the interviews conducted by the investigation crew, have expressed that they have felt that there was “some problems,” but felt that if each of them started to speak out something different from what they were promoting, the nuclear power would not get support from the general public.

According to Mr. Kitazawa, each one of whom they have questioned said they “regretted what they have been doing” without sufficient knowledge, which raises the legal part of the issue of responsibility. The belief in the absolute safety of nuclear energy turned out not to be true, but those who were promoting it believed that this energy was 100% safe. And so these people ended up believing that improvement was “not necessary and unreasonable,” according to the findings of the report.

Information Mismanagement

The report found that the management of information was a failure as well. “Japan was not ready at all to manage a nuclear crisis starting from the accident site to the PM’s office.” How to gather and transmit information in the crisis management turned out the support from the people, and unfortunately during the management of the accident the Japanese government failed to grasp support or reliability of the people on the government.

The Power of Twitter and Bloggers

Mr. Funabashi, another member of the committee, and former reporter at Asahi Newspaper, said that indeed, the Japanese media should have challenged the Japanese government officials more critically. The System for Prediction of Environment Emergency Dose Information (SPEEDI) designed to provide precautionary measure to those who are supposed to evacuate was not made public, and the first to be reporting on the issue were the foreign media, which gradually the people at the PM’s office be informed on the issue. For example, active tweetters and bloggers questioning the SPEEDI and its effectiveness, such as Professor Hayano Ryugo at Tokyo University, started to mention SPEEDI on internet around March 15th. This professor had many followers and one of the first to follow him was a member of the PM’s office. Yet the official explanation given about this story was that “given the uncertainty of the source’s terms the system cannot be utilized,” and it was recommended to the politicians that the system should not be activated. Even though they had invested much money on this system in the past years, they decided not to use it. With so many stories like this one, the Japanese media should have investigated more. And in the most critical moment of the history of the accident, Mr. Funabashi believes that the Japanese media did not serve the general public and that the long established Japanese “Press Club System” is hurting Japanese journalism “to do a rightful and useful job.” For example, the reporters who were already aware of the SPEEDI on March 14th and 16th, have asked many questions to the ministers and the deputy ministers, but no serious report came out on these days in the major Japanese media. “So the press club system did not help communication at all, in this case.”

Although the PM’s office and those who worked on the accident site have worked their best to improve the situation, the report concludes that “most of the effort was not efficient.” Mr. Koichi Kitazawa insists on the fact that “luckily”, the situation did not get worse than what happened, “not too much radioactivity was leaked,” but this “luck” cannot be guaranteed in the future.

The Spectre of Nuclear Terrorism

Ambassador Endo also spoke of a great risk of terrorist attacks taken by TEPCO over the years. According to him, “terrorists could have achieved their intention, as TEPCO hired its employees without keeping track of where they come from and their competence in working in the sector.”

Some of the so-called Fukushima Fifty are still unknown, because TEPCO failed to trace who they are, he noted. (Editor’s note: Suzuki Tomohiko, author of Yakuza and The Nuclear Industry, has asserted that some of them were actually local gangsters. Considering TEPCO’s long history of cozy relations and/or tacit approval of organized crime related firms, this is probably not surprising.)

Did the meltdown occur before or after the Tsunami hit?”

The chairman of the committee said that “there had already been a fatal accident, and a failure of the system had taken place before the tsunami arrived.” The report contains an interview with a person who stayed inside the nuclear power plant. The person interviewed talks about what he and his colleagues saw before the tsunami hit. “According to this person, they saw some steam coming out from inside the reactor and they had special word for the vapors,  namajoki (生蒸気) in Japanese, which is raw steam. They suspected at the time that it was the steam coming from some pipeline between the reactor and the turbines.”

However, in order to tell if there was an accident occurring before the tsunami hit, the workers would have had to go inside the reactor in order to find out what was really happening in there. “At that moment, the radiation level was too high and they could not check what is really happening inside the reactor.” Therefore, the committee “could not finalize the conclusion.”

Jake Adelstein also contributed to this article. 

Tokyo Police Arrest Ex-Ceo/Yakuza associates for financial fraud: UPDATE

Last November, the Tokyo Metropolitan Police Department Organized Crime Control Division (警視庁組織犯罪対策部)arrested the ex-CEO of a Tokyo Stock Exchange listed company  on charges of violating the financial instruments and exchange law (金融商品取引法違反容疑) . Members of the Yamaguchi-gumi, Japan’s largest crime syndicate, a yakuza group, are said to have been involved in the crime. On February 20th 2012, more arrests were made of individuals working for a Yamaguchi-gumi front company. (See UPDATE at bottom).

*This article was originally published in November of 2011 and has been updated March 26th, 2012. 

The company was not Olympus and the man arrested was not Tsuyoshi Kikukawa, the former CEO of Olympus.

However, Olympus is currently under investigation by the Tokyo Metropolitan Police Department, the Tokyo Prosecutor’s Office, and the FSA/SESC for suspected violations of the same law. Olympus via its allegedly independent investigative committee announced recently that there was no evidence of organized crime involvement in the massive financial fraud the firm perpetuated for more than a decade. In that fraud, Olympus used a network of dubious companies. Individuals who have been found guilty of investment fraud and insider trading, managed at least two of the companies Olympus used to hide past losses: NEWS CHEF and J-Bridge.

In this particular case, the man arrested along with four others was Tsuyoshi Nakamura, former president of general contractor Inoue Kogyo Corporation. He was charged with arranging a fake capital hike in violation of the financial instruments and exchange law.

The police also arrested four others on charges of violating the law. Nakamura and the others are suspected of arranging a false 1.8-billion-yen capital hike of the company by issuing of new shares in September of 2008.
  Investigative authorities suspect that 1.5 billion yen of the total “capital hike” was money  circulated from an investors union known as Apple Limited Fund (Tokyo Chuo-Ward).   Yamaguchi-gumi members had a role in running the fund, but it is not clear whether it was front company or simply a “cooperative entity.” Police believe the fake capital increase was used to  raise the stock prices long enough for Yamaguchi-gumi members to sell their acquired shares at a large profit.

The Tokyo Police believe that formerly TSE listed company Inoue Kogyo was used by the yakuza as a platform to manipulate stock prices and cash in on leaked stocks. *artwork by Mari Kurisato.  http://marikurisato.com

Nakamura and his associates are also being investigated for possible violation of the organized crime penal laws, specifically money laundering. Inoue Kogyo, which was listed on the second section of the Tokyo Stock Exchange, filed for court approval for the start of bankruptcy proceedings in October of 2008, due to financing difficulties. It was delisted the same month.

This is not the first time a company listed on the Tokyo Stock Exchange has been involved with organized crime. In March of 2008, Suruga Corporation, had its offices raided in connection with their use of a Yamaguchi-gumi Goto-gumi front company to evict tenants from buildings that Suruga Corporation wished to acquire. The Yamaguchi-gumi members involved were arrested for violations of the lawyers law (弁護士法違反) . In Japan, only legal counsel has the right to negotiate eviction with building tenants. No one from Suruga Corporation was arrested for hiring organized crime members to do their dirty work; it was not a crime to utilize yakuza for business purposes in 2008. At the time of raid and the arrests, Suruga Corporation had on their board of directors a former National Police Agency Organized Crime Control Division bureaucrat and an ex-prosecutor. After the firm’s organized crime ties were revealed, banks refused to loan the firm money and they began corporate rehabilitation procedures in June of 2008. In the same month, the TSE announced they would be delisting Suruga Corporation–because of the firm’s financial difficulties–with no reference to the firm’s ties to organized crime. Suruga Corporation was delisted on July 25th, 2008.

It should be pointed that Inoue Kogyo and Suruga Corporation were listed on the second section of the TSE, while Olympus is listed on the first section, so obviously different standards of corporate compliance and investigation are to be expected.  First section companies, we assume, would never, ever, get involved with organized crime. Not like those second sector guys.

UPDATE

More arrests were made in the Inoue Kogyo case on February 20th this year according to the Yomiuri Shinbun and other sources. Yu Kanatake (金武雄) , the president of Shinsho (神商)a business loan firm and two other individuals are charged with violations of the lending laws. Allegedly they lent over 7 million dollars (7億円以上)to  those involved with the fake capital increase, without the proper license. In March of the same year, the Tokyo Metropolitan Police arrested Itchu Nagamoto, notorious Yamaguchi-gumi moneyman and financier for his role in the capital increase. Nagamoto, who is of Korean origin, had fled the country when the investigation began. The Tokyo Metropolitan Police Department stated to the Yomiuri and other media that Shinsho was closely linked to the Yamaguchi-gumi, Japan’s largest organized crime group and that they believed profits made on the financial transactions were kick backed to the Yamaguchi-gumi.

OLYMPUS: Bringing It Into Focus–A Special Breach Of Trust? UPDATE

In the last week, the New York Times, the Financial Times(article in Japanese)  and Reuters have reported heavily on suspicious transactions at Olympus Corporation, one of Japan’s oldest and most distinguished camera and optical equipment makers. The board forced out acting CEO,  Michael Woodford, after he became too diligent in doing his due diligence on questionable financial transactions at the company. Olympus claimed he was forced out for cultural differences. In one sense, they were correct. If Mr. Woodford was Japanese, he would have understood his promotion involved an implicit exchange of power for shutting up about things no one wants to talk about it. He just doesn’t get it.

Yes, the world is always made complicated by honest men with a sense of justice and duty–to themselves and to their shareholders or to some greater good. The whole scandal emerged first in the Japanese media. Yes, despite what you have been told good investigative journalism does exist in Japan. The magazine FACTA, has been following the story for months and ZAITEN, also ran a long feature on how Olympus’s money bleeding investment arm, ITX,  had been amputated quietly–but not so perfectly that  the huge pools of financial blood were not noticed. The mainstream Japanese media has chosen to ignore the story, probably because HUMALABO, the cosmetics and supplements maker, which Olympus now owns—is also a huge advertiser, especially in newspapers.

In year 2008, something happened at Olympus that turned the company from an entity focussed on seven major business areas, into a company completely out of focus, blurred by a total of seventeen business areas, to include real estate, investments, consulting, waste disposal, labor dispatch, and running travel agencies. Igari Toshiro, former prosecutor turned anti-yakuza crusader, who was Japan’s greatest expert on white-collar organized crime aka the keizai yakuza (経済ヤクザ)and many veteran organized crime detectives have stated that one of the first signs that a company has been infiltrated by anti-social forces is a sudden and totally new change in company direction–especially into areas like waste disposal, labor dispatch (temporary staffing), and real estate—all areas where anti-social forces have carved out a large niche for themselves.

Olympus seems to have lost their focus in June of 2008. Anti-social forces may have set their sights on the company at this time.

Olympus invested at current exchanges, what would be over 700 million dollars into three companies, in 2008 circa the time of their transformation into Super Olympus–and later wrote down the value of those investments by three quarters in the same year.  The three companies shared addresses and office space with several other companies with different names but sometimes the same employees, creating a web of real and paper companies that make tracking the money very difficult. One of the auditors involved is considered a corporate blood brother (企業舎弟・kigyoshatei) to the Yamaguchi-gumi, Japan’s largest crime group, by law enforcement and regulatory agency sources. In short, what happened at Olympus has all the earmarks of anti-social forces gaining entry into a company and draining it of cash. The Yubitoma case in 2007, the taking of Lehman Brothers Japan for 350 million by a yakuza connected firm Asclepius in 2008, and other cases bear a striking resemblance to what seems to have happened at Olympus.

When the board of a company continues to make decisions that negatively impacts the financial situation of the company, it is the duty of the CEO under the The Companies Act (会社法)to address these acts of corporate malfeasance and if need be, make the shareholders aware of the problem and possibly file criminal charges. It would appear, based on all that has surfaced, that Mr. Kikukawa, who ran Olympus during the periods where the suspicious transactions took place, and possibly other directors as well, may be guilty of the crime of an aggravated breach of trust . (会社法第960条・取締役などの特別背任罪)The law essentially says the following, “when a director (executive officer etc), for the purpose of promoting such person’s own interests or the interests of a third party or inflicting damage on a Stock company, commits an act in breach of such persons duties and causes financial damages to such Stock Company, such person shall be punished by imprisonment with hard labor for not more than ten years or a fine of not more than ten million yen or both.  If this is what Mr. Kikukawa and other board members have done, then under the The Companies Act (会社法), Mr. Woodford would be an accomplice to a crime by remaining silent.

I’m certainly not the judge and jury in this matter. However, as a reporter who has been covering organized crime since 1994, I feel confident in saying that if there hasn’t been a takeover or collusion of the company by anti-social forces, there is certainly a level of corporate malfeasance here that has already drawn the attention of the Japanese law enforcement agencies and regulatory agencies. It is drawing world attention as well. Investigations will come. No one can be sure what will be found until the digging is done.

The Neojaponisme Blog has a very interesting catalog of the players involved in the transactions. It begins like this:

A Guide to the Olympus Mysteries

Updated October 25

On October 14, 2011, Japanese camera maker Olympus (オリンパス) fired its CEO Michael Woodford after a mere eight-months on the job. Woodford, through a serious of interviews with the foreign press, revealed that the dispute arose over his investigations into the company’s use of $1.3 billion USD on two mysterious sets of corporate deals. (Full back story here.) These controversies set off a 50% decline in Olympus stock price as well as calls for independent investigation from the company’s top institutional shareholders.

Ignoring the boardroom drama for a moment, there are two major mysteries of this Olympus story. First is the $687 million in fees paid to financial advisors AXAM Investments Inc. and Axes America LLC. Second is the over-payment in acquiring three minor companies — Altis, Humalabo, and News Chef — that have little to do with Olympus’ core business. While the Western media is working hard to investigate the ultimate recipients of the $1.3 billion, we thought it would be helpful to keep tabs here on what we know about the mystery companies in question.

As new details emerge, we will update this page. Please feel free to offer any further details or corrections.

 

The Financial Advisors: AXAM Investments and Axes America

Olympus has confirmed its paid $687 million USD in “financial advisory fees” to two companies AXAM Investments Inc. and Axes America LLC for assistance with its $2 billion acquisition of British medical company Gyrus Group Plc (Business Week). With standard M&A fees at 1-2%, AXAM and Axes’ haul ended up being the largest financial advisory fee paid in history (Reuters). According to Reuters, Olympus paid AXAM and Axes $177 million in preferred shares, but the companies asked Olympus to buy them back in March 2010 — at the price of $620 million.

Who is AXAM Investments, Ltd.?
There is almost no public information about AXAM Investments Ltd. other than its registration in the Cayman Islands. The company, however, was stricken from the Cayman Islands’ local registry in June 2010, and there are no materials on the Internet revealing further information about its existence.

The PricewaterhouseCoopers (PwC) report on the deal suggests that Hajime Sagawa of Axes America LLC represented AXAM in the negotiations with Olympus (Reuters). TheNew York Times reported on October 24 that Axes “assigned” its Gyrus shares to AXAM after it closed in March 2008. Sagawa’s wife, however, denies Sagawa’s involvement with AXAM (Reuters). While not proof of a connection, there are, however, records available on the Internet showing Hajime Sagawa shipping personal affects from/to aSeven Mile Beach location on the Cayman Islands to/from his Boca Raton home in 2006 (waybill).

Who is Axes America, LLC?
Axes America LLC is nearly as obscure as AXAM, but there are traces of the “dormant” company on the Internet. The firm was first established on February 13, 1997, and according to FINRA records, dropped its “broker-dealer registrations” in 2008, three months after the Olympus deal closed (Axes websiteFortune). The company originally had $160,000 USD in paid-in capital (ref).

Axes America was once based in office suites at 420 Lexington Ave Rm 2009, New York (Biz Find), but Reuters found a security guard who said the office had been closed for a few years (Reuters). Earlier, the company had two addresses in Connecticut. One at 220 Fox Ridge Rd, Stamford, which is a normal house rather than an office complex (reference). The 2001 website for Axes (Japan) Securities meanwhile lists the address 70 Seaview Avenue, Stamford, CT 06902 (office building images).

Axes America’s President and CEO for many years was the aforementioned 64 year-old Hajime “Jim” Sagawa (in kanji, 佐川肇). In the 1980s, he was employed at Nomura Securities and now bankrupt investment firm Drexel Burnham Lambert (the one time home to “junk bond king” Michael Milken). He then later headed up M&A at Sanyo Securities America and was a managing partner at stock brockerage PaineWebber(now part of UBS AG) (ReutersFortune). Reuters traced Sagawa to a “resort home” in Boca Raton, Florida (Reuters). Sagawa in recent years has been associated with companies Sagawa Capital (registered to his Boca Raton home, closed in December 2010), Sagawa & Company (registered in NY, home jurisdiction in Delaware), andSagawa International Services (Pompano Beach, Florida),

In 2001, Axes’ Japanese website identified the shareholders of Axes America LLC as three employees Akio Nakagawa, Masayuki Hamada, and Hajime Sagawa. Other key personnel of Axes America include Takahashi Yoshinori (高橋芳徳) (originally hired as a “Technical Translator” in his H1B visa application) who has been CEO (c. 2002-2006) and Executive VP (ref).

The New York Times reported that Nakagawa and Sagawa first worked together in 1988 at Drexel Burnham Lambert. Nakagawa had worked at Merrill Lynch. Both left Drexel in 1990 and moved to Paine Webber, from which Sagawa was laid off in 1996. (The Times article provides the best biographical detail on Sagawa.)

According to the New York Times, an unnamed official at Olympus approached Axes about assisting with M&A deals.

Axes America LLC eventually shut down on March 5, 2008 — one month after the Gyrus deal closed (New York Times).

Who is Axes (Japan) Investments?

For the complete article continue on to The Neojaponisme blog

Yakuza Friendly Hotels–on the way out. Goodbye Nine-Fingered Discount!

As a part of broader initiatives to expel organized crime from business, new “yakuza exclusion” provisions by the Japan Tourism Agency (JTA) go into effect today.

The JTA maintains a “Model Accommodation Contract”, which serves as a widely-accepted set of guidelines recommended for hotels, ryokans, and other lodging facilities.

The agency explains on its website: “As anti-social forces threaten the physical and financial safety of tourists and the hotels themselves, we have enacted new provisions to our existing laws.”

Along with informative stipulations such as “guests may be turned away if there is no vacancy” and “guests may be turned away if equipment breakdowns occur due to a natural disaster”, a new clause states that if a guest is discovered to be an organized crime member, their hotel reservation may be cancelled or they can be turned away. Additionally, they can also be kicked out. Guests may also be asked to leave they act in a violent manner or if they make “considerable trouble” at the hotel.

According to an article in the Asahi Shinbun, the National Police Agency had called for such measures to be taken since 2006. Police hope that such a measure, finally in place, will spread through the rest of the country. Arima Hot Springs Tourism Association, for example, had already implemented such measures. This association of hotels is located in Kobe, which is also the home of the Yamagumi-guchi.

Sado-san of the Japan Tourism Agency, who is coy about his first name, stated that there was no reason in particular that the Agency has decided to implement these provision now; he refers to the ongoing dialogue concerning such provisions that the agency has had with the police over the past few years. Kind of a, “just getting around to it” sort of thing, it seems.

The below excerpts of the contract are taken from the English version online.

Article 5 – Refusal of the Conclusion of the Accommodation Contract
05.01. The following are cases where our Hotel (Ryokan) will not accept the conclusion of the Accommodation Contract:

(4) When the Guest seeking accommodation is considered to be corresponding to the following (a) to (c).
(a) The law in respect to prevention, etc. against illegal actions by gang members (1991 Law item 77)
stipulated article 2 item 2 (hereinafter referred to as “gang group”.), gang member stipulated by the
same law article 2 item 6 (hereinafter referred to as “gang member.”), gang group semi-regular
members or gang member related persons and other antisocial forces.
(b) When gang group or gang members are associates of corporations or other bodies to control
business activities.
(c) When a corporate body has related persons to gang members.

Article 7 – The Right of Our Hotel (Ryokan) to Cancel the Contract
07.01. The following are cases where our Hotel (Ryokan) may cancel the Accommodation Contract:

(2) When the Guest is clearly considered to be corresponding to the following (a) to (c).
(a) Gang group, gang group semi-regular members or gang member related persons and other
antisocial forces.
(b) When a corporate body or other organization where gang groups or gang members control business
activities.
(c) In a corporate body which has persons relevant to gang member in its board member.

Japan Tourism Agency has given the finger to the nine-digit crowd aka the yakuza.

Jake’s notes: Most major hotels in Japan since 2009 have embedded an anti-organized crime exclusionary  clause into the overnight stay contracts guests sign when checking in. A yakuza member who signs in as a hotel guest and conceals his/her yakuza affiliation can then be arrested for fraud, if the hotel agreement has that clause. The anti-organized crime clause was the brain-child of deceased lawyer, and former prosecutor Igari Toshiro. This contractual clause was used this year to arrest the second highest ranking member of the Yamaguchi-gumi Kodo-kai for “playing golf under false pretenses.”  Yakuza are great fans of expensive luxury hotels but as illustrated in Itama Juzo’s classic film 民暴の女(Minbo no Onna/The Gentle Art of Japanese Extortion)–they often cost the hotel more in business and in financial losses than what they pay for their top-of-the-line rooms.

NISA Needs To Take Evil Lessons

It has been recently revealed that in 2006 the Nuclear and Industrial Safety Agency asked Chubu Electric company to recruit citizens to ask “pre-arranged questions” (“やらせ質問”) and speak favorably about nuclear power at public hearings on the proposed use of MOX fuel. These hearings took place in the summer of 2006 in Shizuoka and Ehime prefectures. Certain utilities asked its employees and even local residents to say positive things about the plutonium thermal project to win over support for the controversial proposal.

After getting caught manipulating public opinion to be pro-nuclear and to shut up dissent, NISA distributes "bowing in shame" (土下座)figurines to employees, with mini-manual to improve public opinion of NISA with quality apologies. (Not really.) It's not easy being an atomic cheerleader.

The Ministry of Economy, Trade and Industry (METI) has made the requisite denouncements, promising an independent investigation into the matter, to be published by the end of August.

The Sankei Shinbun reports that according to Chubu Electric, NISA requested they put these “questioners” in inconspicuous locations in the assembly hall. They were also asked to “try not to call on those in opposition to the plutonium thermal proposition,” but to have citizens ask questions that have been pre-made by Chubu Electric. They ended up drafting the questions, but after consulting their legal compliance department, they reaching the conclusion that such an act would be extremely dubious and never actually distributed them. In fact, Sankei reports that some Chubu employees encouraged citizens to “speak honestly, even if your opinions are critical”.

Other utilities went along, however. According to the Asahi Shinbun, Shikoku Electric “sought out 29 people, including local residents, to speak up in the government-sponsored session, providing them with ‘example opinions’ beforehand….One person said at the session: ‘I was somewhat relieved to learn that using fuel made from plutonium blended with uranium would not be very different from using uranium in terms of the gases generated’. The words were similar to the sample opinion.”

There is something darkly funny about the provided  “example opinions”. While this is another serious example of collusion between industry and regulators, the incident also just seems pathetic–conjuring ridiculous images of confused citizens reading awkwardly from index cards, stumbling over the terminology, NISA officials shuffling over to help with the pronunciation of the more challenging nuclear words: “No no, thats actually thor-ium…yes, yes, now please start from the beginning.” This is really the best strategy they had to generate favorable public opinion?

Maybe I’m simply unfazed by these nuclear industry “scandals” the press keeps uncovering, but rather than villianous, the attempts at manipulation just seem too incompetent to take seriously. They could certainly learn a thing or two from the oil barons of the US or the bankers on wall-street. Or maybe it just shows how little effort is required to get away with unethical behavior in an environment as saturated with corruption as Japan’s nuclear industry is.

Jake’s note: NISA is part of the Ministry of Economy, Trade and Industry (METI). The same agency which is now investigating NISA for “improper behavior”. Allegedly, the job of NISA is to regulate the nuclear industry, not be the atomic energy cheerleaders. There were seven NISA inspectors on the site at the Fukushima Daiichi Nuclear reactor on the day of the earthquake, March 11. All of them fled immediately, leaving very few people competent to measure the radioactive levels at the site or assess the danger leverl. NISA in response to my questions insisted that this was not dereliction of duty.

NISA has never filed criminal charges against TEPCO although the firm has repeatedly forged documents and altered data in over 161 incidents, which constitutes forgery and possibly fraud under Japanese criminal law. If it wasn’t clear that NISA is more about supporting the nuclear industry than regulating it, it is now. They might as well trade in their geiger counters for some pom-poms. It would make the agency more transparent.

People Who Eat Darkness (闇を食う人々)An amazing book and a tissue sample of Japan's social pathological elements

People Who Eat Darkness: The Fate of Lucie Blackman*
By Richard Lloyd Parry (Jonathan Cape 404pp £17.99)

When the disappearance of Lucie Blackman made the news, I was covering it as a reporter for the Yomiuri Shimbun, Japan’s largest newspaper. By necessity rather than by choice, I was already familiar with the darker side of the country: I had spent 1999 to 2000 as a police reporter assigned to the 4th District, home of Japan’s largest adult entertainment area, Kabukicho. Despite being from different papers, Richard Lloyd Parry and I worked the story together, exchanging information, contacts and tips. There was a chance that Lucie might still be alive, being held captive somewhere. The hope that reporting on it might make a difference superseded any journalistic rivalry. Now Parry has written a compelling book about the depravity of man, the difficult pursuit of justice, and how we deal with the wrongful deaths of those whom we loved.

Lucie, a young English woman, came to Japan to have fun and make money as a hostess in order to pay off her debts. She never went home. Her alleged killer, Joji Obara, is a clever man and a graduate of the law department of an elite Japanese university. I write ‘alleged’ because, despite all the circumstantial evidence that he was responsible for her death, the Japanese courts have only convicted him of dismembering her corpse. The charges were of rape resulting in death, but they have not yet been proven to the satisfaction of the judiciary. Obara knows that without a full confession, the Japanese police are handicapped, and prosecutors loathe such a case. He also knew enough of the law to prey on foreign hostesses. Hostessing is not allowed on foreign visas. If foreign hostesses go to the police as victims of sexual assault, they themselves are arrested and often deported, and no charges are generally brought against their assailants. (For years, human traffickers in Japan exploited this same fact.)

Every year, roughly 80,000 people go missing in Japan. The police don’t investigate each disappearance, or even a significant fraction of them. Perhaps if Tim Blackman, Lucie’s father, hadn’t raised hell, the case would never have been seriously investigated. But once the Tokyo Police realised that this was not just another missing persons case, they pursued it with vigour and determination. While the police are generally treated fairly in the book, Parry implies that they were uninterested in the case, and this is not so.

Parry’s book describes in detail Tim Blackman’s frustration with the police efforts to track down the phone number of Akira Takagi, one of his daughter’s friends, a few days after she vanished. Explanations of why they couldn’t do it probably seemed disingenuous to the Blackman family. I’m sure they were. The truth is that because of the no-caller-ID setting Takagi had placed on his phone, it wasn’t possible to trace the call. According to Shoji Takao’s Keiji No Banka (‘The Detective’s Dirge’), an in-depth account of the police investigation written with the aid of the detectives who worked the case and published in Japan last year, a huge amount of time and energy was spent examining the fraction of recoverable phone records and developing. a lead on the case.

The Japanese police as a general rule do not reveal information about an ongoing investigation to anyone, because it would hurt their case in court. The usual practice is to conceal critical data that only the criminal could possibly know, in order to obtain an ironclad confession that can’t be explained away by saying, ‘I was just repeating what I read in the papers.’ If the police come off looking lazy, bureaucratic and disinterested, it’s simply because they care more about getting the perpetrator then they do about social niceties. One detective who worked the case put it this way: ‘The best thing we can do for the family is to see that justice is served. Everything else is secondary.’

One of the ironies of the case was that some of the key sources who helped the police track down Obara were yakuza affiliates of a Tokyo-based crime group. They are not generally good Samaritans but there are three things that the group bans and that are cause for immediate expulsion: theft, robbery and rape. Obara was scum even in their eyes. When Lucie’s body was found, one member of the group contacted me with a message: ‘If Obara doesn’t get the death penalty, we could administer it. Prisons are full of accidents. Let Mr Blackman know. If that’s what he wants, we’ll see that justice is done.’

Obara has also been found guilty of raping several other women and of killing Carita Ridgway, a well-liked girl from Perth, Australia. (Ridgway and I had a mutual friend, a classmate of mine who worked at the same hostess bar as Ridgway and whose testimony was used to convict Obara. It’s a small, ugly world sometimes.) People Who Eat Darkness is also about these other women, and the suffering of their family members and friends. Furthermore, it is an indictment of Japanese society, in which sexual crimes against women, especially those working in the adult entertainment world, frequently go uninvestigated. Rape is a crime punishable by as little as three years in jail; at the time Lucie vanished, the penalty was only two years. Even today, a first-time offender, if he admits guilt and pays damages to the victim, may still get a suspended sentence.

Parry has spent years researching and writing this book. It allows readers to experience Japan’s S&M subculture, the police bureaucracy, and the tightly controlled press club system, parts of Japan that most Japanese never know. One also feels one is reliving the tragedy as a friend of the family, with all the agony it involves. It’s a journey worth taking, if you have the stomach for it.

I never passed on that message from the yakuza. After finishing Richard Lloyd Parry’s book, part of me wishes that I had. However, there are some choices that I think people should be spared from making. We are all responsible for our own choices. The choices that Obara made ruined the lives of many. The choices of Lucie’s family and some courageous victims are what put him behind bars. Like every exceptional book, there is a moral to this tale. But it’s up to readers to determine for themselves just what that moral really is.

Note: In June this year (2011) Richard Parry had a book talk at the Foreign Correspondent’s Club of Japan that was enlightening and informative. My live (at the time) tweet feed on the conference can be read by clicking here. Thanks to @nofrills on Twitter for compiling it. Many other related books in Japanese can be found at the bottom of the page.

*This review was originally published in the British periodical, The Literary Review and is reprinted with their position. It’s a great magazine for those who love reading.

Why Japan's Mainstream Media Can't Be Trusted To Report Objectively On TEPCO (東京電力)

When the earthquake struck Japan on March 11th and knocked out TEPCO’s Fukushima nuclear reactor, setting off a chain reaction of disasters–TEPCO’s chairman Tsunehisa Katsumata was nowhere to be found.  Where was he? He was on a tour of China with members of some of Japan’s largest media outlets–and TEPCO was footing the bill.

On March 30th, not only did TEPCO admit that the chairman had been taking Japanese mass media power brokers on the trip to China but also that TEPCO paid the majority of the travel fees for the participants. On April 7th, a reporter asked TEPCO to reveal the names of the mass media firms that had executives and/or former executives joining the chairman on his trip, but TEPCO dodged the question.

It’s well known that TEPCO pays huge advertising fees to most media outlets; it is one of the largest advertisers in Japan. It’s not as well known that the president of TEPCO, Masataka Shimizu, is also the chairman of  the Japan Society for Corporate Communication Studies (JSCCS), which includes among its members former and current top executives from Asahi Beer, Toyota, and Dentsu, Japan’s largest advertising agency. The board of directors also includes a representative of Nihon Television’s Reporting Bureau, Economic News section:

大野 伸 (日本テレビ放送網(株) 報道局 経済部)

In a sense, the president of TEPCO is the chairman of what is whispered to be the equivalent of a lobby group that wields the power of advertising revenue over anyone who crosses their paths. It is ostensibly a group of scholars, executives, advertising agency bosses, mass media representatives, and businessmen who gather together to study more effective means of communications. Veteran Japanese reporters assert that the society also functions as powerful consortium of large corporations who know how to use the threat of taking away advertising dollars as a whip to keep the Japanese media muzzled.

You don’t have to be too bright to figure out that if TEPCO, Toyota, Asahi Beer and Dentsu somehow banded together and pulled advertising from your newspaper, television channel, or radio program, that it would be financially devastating. In the April edition of weekly magazine Asahi Geino, Noted journalist, Takashi Uesugi claims that on March 15th, after repeatedly lampooning and criticizing TEPCO on TBS Radio that the producer asked him to leave the show, claiming that the program was being “revamped.” TBS Radio refuses to comment on the issue at present.

Masataka Shimizu, the president of TEPCO, is still listed as the chairman of the JSCCS but on April 1st his “greetings” were taken down from the sight and replaced with the words of the vice-chairman. The current page expresses condolences to the victims of the recent disasters. There is no mention of the problems at the Fukushima reactor,  only that Chairman Shimizu is now too busy dealing with the disaster to fully devote himself to his duties for the organization.

According to a mainstream Japanese media reporter, the TEPCO tours of China have been going on for over ten year. “The trips have a token amount of study, such as visiting a factory, or whatever has been scheduled to justify the event for that year. In reality, most of the day is devoted to sight-seeing. At night the TEPCO executives wine and dine the reporters, editors, or  mass media representatives. And of course, the obligatory karaoke.”

It’s not surprising that much of the Japanese mainstream media has been less than critical of  TEPCO up until now. It’s very hard to raise your voice loud enough to be heard from inside the pocket of your sponsor.

The president of TEPCO also is chairman of the Japan Society For Corporate Communication Studies. Their motto: "Striving to create a new vision of society." It may be a myopic one.