Sōkaiya

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Sōkaiya (総会屋 sōkaiya?), (sometimes also translated as corporate bouncers, meeting-men, or corporate blackmailers) are a form of specialized racketeer unique to Japan, and often associated with the yakuza that extort money from or blackmail companies by threaten to publicly humiliate companies and their management, usually in their Annual meeting (総会 sōkai?).

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[edit] 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 to reduce the risk of such rumors. Even after the Japanese laws include 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 disease, 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 lawyers in America[1].

While the yakuza was involved in the business early on, only in the late 60s they start to turn around the business relationship from protection to extortion. Police confiscated with 900 million yen more yakuzy money related to extortion than to any other yakuza business.

In 1984, the law made first steps to reduce the threat from sōkaiya by establishing a minimum number of shareholder value (50 000 yen) in order to be allowed to the shareholder meeting, leading to a slow decline of the number of sōkaiya. In response to this, the sōkaiya formed fake right wing groups, announcing embarrassing company secrets, fictional or not, from loudspeakers mounted on trucks in order to extort money from companies[1].

In 1994, Suzuki Juntarō, vice president of Fujifilm was murdered by sōkaiya since he stopped paying these bribes.

[edit] Activities

[edit] 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 beforehand in detail to find out secrets or misconducts of the company, and then slackmail money from 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 to disprove.

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.

[edit] Other disruption

Sōkaiya also form often right wing groups, announcing embarrassing company secrets, fictional or not, from loudspeakers mounted on trucks in order to extort money from companies[1]. They may also print special newspapers with topics embarrassing to companies, and then ask the company to buy the entire print on inflated prices, or even to subscribe to these newspapers, generating a steady flow of cash.

[edit] 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 disease, 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.

[edit] Countermeasures

Sōkai are prohibited under the Japanese Commercial Code. A countermeasure of corporate Japan is to hold all shareholder meetings on the same day, reducing the risk of exposure to sōkaiya[2].

[edit] Background

While in the west 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[3]. In this atmosphere, the sōkaiya are able to prosper. However, the trend for more deregulation in the Japanese market the business environment for sōkaiya is getting more and more difficult.

[edit] Companies that have bribed Sōkaiya

Major companies that have been found guilty of employing Sōkaiya include but are not limited to:

[edit] References

  1. ^ a b c Szymkowiak, Kenneth (2002). Sokaiya: Extortion, Protection, and the Japanese Corporation. East Gate Book. ISBN 978-0765607805. 
  2. ^ a b c d Ray Heath (December 2002). "Japan reels from Sokaiya scam" (html). ThisIsMoney.co.uk. Retrieved on 2007-03-18. 
  3. ^ (March 1997) "Japan faces fresh scandal - Corporate Japan finds cutting racketeer ties tough" (html). CNN Money. Retrieved on 2007-03-18. 
  4. ^ a b c d (December 1997) "Sokaiya scams hit Japan - Japanese companies ill-equipped to deal with corporate extortionists" (html). CNN Money. Retrieved on 2007-03-18. 
  5. ^ a b Tamae K. Prindle; M.E. Sharpe (1989). "Made in Japan" and other Japanese business novels. 

[edit] 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
  • SZYMKOWAIK, Kennet, F., Sōkaiya Criminal Group and the Conflict for Corporate Power in Postwar Japan, "Asia Profile", Vol. 20, No.4, August, 1992
  • SZYMKOWIAK, Kennet, F., Sōkaiya: An Examonation 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.

[edit] External links

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