Ex-Tokyo cop speaks out on a life fighting gangs — and what you can do
By EDAN CORKILL
Japan Times Staff writer
Sunday, Nov. 6, 2011
Kiyoshi Nakabayashi well remembers how, when he was a high school student in the late 1950s and early '60s, newspapers were full of stories of violent gang wars being fought out openly on the streets of Tokyo.
PHOTO = Hands-on approach: Retired senior policeman Kiyoshi Nakabayashi discusses his career and Tokyo Metropolitan Government's new antigang ordinances at the office of the National Center for the Elimination of Boryokudan, where he is now an adviser. YOSHIAKI MIURA PHOTO
Most Japanese reacted to those brazen displays of violence with mute fear or, perversely, thrilled admiration. Nakabayashi's reaction was different. "Like a doctor treats a sickness," he says, he wanted to cure society of its ills.
So, immediately after he graduated from high school in his native Nagano Prefecture, he went to Tokyo and signed up with the Metropolitan Police Department.
It was in 1963, a year after Nakabayashi joined the police force, that the gangs — known in popular culture as the yakuza, but to officialdom as bōryokudan (violent groups) — reached a peak in their combined membership. It's estimated they then numbered more than 184,000.
Since then, the officially estimated number of gang members nationwide has been in a more or less steady decline. In 2009, the last year for which figures are available, the total gang membership hit 80,900 — but that decrease has done little to slow the regular drumbeat of murders, robberies, extortion, blackmail, fraud and other crimes that at regular intervals explode into very public scandals and remind Japan's regular citizens of organized crime's continuing role in society.
Recently, however, efforts to curb gang activity have also made the headlines. One month ago, Tokyo and Okinawa became the last of Japan's 47 prefectures to enact ordinances prohibiting, among other things, the payment by companies or businesses of any monies or other remuneration to the gangs. It's always been illegal to extort. Now it's illegal to pay an extortionist, too.
One person who welcomes the new regulations is Nakabayashi, who never forgot that it was a desire to deal with the gangs that set the trajectory for his near half-century career in law enforcement.
Patrol officer, detective, sergeant: The physically imposing yet flawlessly professional Nakabayashi flew up the police ranks. By the age of 26 he had been transferred to the department responsible for dealing with organized crime. He retired from the force in 2003, having risen to be head of that department's division dealing with Japanese organized crime.
Nakabayashi agreed to talk to The Japan Times about his career because he believes passionately that the only true way to solve the problem of the gangs is to change the consciousness of the public.
Japanese people, he says, have to shake off a mindset that tends toward resignation in the face of difficulties and a fear of being shamed, especially in public. This mindset, he believes, is the true lifeline of the gangs. But he thinks the new ordinances are a step in the right direction.
After retiring, Nakabayashi worked for several years at the government-mandated National Center for the Elimination of Bōryokudan ("Bōtsui Center"), which maintains a national network of facilities — at arm's length from the police force — aimed at encouraging people who have fallen victim to the gangs, or worry that they might, to seek help.
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PHOTO = Strong arm of the law: Kiyoshi Nakabayashi's physical stature, which he honed through years of judo training in his teens and 20s (above), was one of the reasons he was transferred to the organized-crime department of the Tokyo police force. Below: He is seen standing outside the force's former headquarters in the central Kasumigasaki district around 1973. PHOTOS COURTESY OF KIYOSHI NAKABAYASHI
Now 67, Nakabayashi currently serves as an adviser to the Bōtsui Center. It was in their office in Tokyo's Bunkyo Ward that he sat down last week to speak with The Japan Times.
Why did you want to join the police?
I was in high school during the postwar period of rapid economic development, around 1960. I thought a lot about what I should do, whether I should go to university or not.
The newspapers were full of stories of gang wars — shootouts in broad daylight and so on. We were told it was the period of "postwar peace," but domestically, Japan was at war, and that left a deep impression on me. I decided I wanted to do something to fix the illness that was afflicting society — like a doctor. I became interested in the police force and their gritty detectives who were standing up to the gangs.
At the same time, the student movements were beginning, so I didn't think I could learn anything at university. The police force, which in Tokyo was working to ensure the safety of that massive metropolis, was the "university" for me.
You graduated from high school in Kiso, Nagano Prefecture and then you came to Tokyo to join the force.
That's right. I went through the initial training and started working here.
Was the job what you expected it to be? You joined in 1962, two years before the Tokyo Olympics.
Yes, it was an extremely tense period. Establishing order in Tokyo was paramount. And of course, a key part of that was dealing with the gangs. They had taken advantage of the confused postwar situation and in 1963, a year before the Olympic Games, they hit the peak of their membership — about 184,200.
And yet there were problems in the police force, too. In 1963, there was the infamous "Yoshinobu Incident," in which a 4-year-old boy was abducted. The police messed up the early phases of the investigation and ended up going to pay the ransom — but then letting the criminal escape. They caught him two years later and discovered that the boy had actually been killed soon after being abducted. This was a huge scandal. Calls were made for the whole force to be overhauled and bolstered.
I was a new patrolman at the time, but as a result of that upheaval I was sent to detective school when I was just 22.
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That the Yoshinobu Incident failures should never be repeated. They lectured us on carrying out investigations as part of a team; how to think as a team. They talked about developing an instinct for detective work; how to project authority; how to place yourself in a position of superiority over someone — and how dedication, sincerity and strength of will are essential. Those are the qualities you need when you confront a suspect or a bad person, and they are also essential in gaining the trust of a victim or an informant. If you can achieve that state of mind, then the details fall into place.
What was your first posting after you became a detective?
I went to a suburb out near Kichijoji, which at the time was like many developing areas in that it combined the elements of a dormitory town with an entertainment district near the train station.
We had to do everything, but the most common trouble was street violence — the bōryokudan were everywhere. Of course, there were also robberies, fraud, youth crimes and so on. But I came to realize that the people pulling the strings were the bōryokudan. They bought the stolen goods and they organized the youths into gangs.
You saw how their system worked?
That's right. And the next step in a police career is to become a sergeant. There was an exam, and I passed when I was 24. I was posted to a different station, and when I arrived there the chief of the detective section was waiting. "Oh, this guy's big, and he looks earnest and capable. He can do bōryokudan!" he said.
PHOTO = Sharing the load: "A healthy society is a safe society," Kiyoshi Nakabayashi says, explaining that the cooperation of all citizens is necessary to eliminate the yakuza. YOSHIAKI MIURA PHOTO
And that was fine by me except that in this particular suburb, the bōryokudan were very powerful — they would march right into the police station and shout at the chief. I won't name the station now, but it was really rough.
We soon realized that the best weapon we had against the bōryokudan was to prosecute them for gambling (which is illegal in Japan except under highly restricted conditions).
Gravel-making was an important industry in that area. It was necessary for making concrete, and with the building boom the stuff was like diamonds. People were needed to make the gravel, as well as to be drivers, middlemen and dealers. And then there were executives from local companies and shop-owners, and every night they'd gamble at illegal dens. So we went after them.
Exactly how did you do that?
At the time, the usual approach was to try to catch people in the act of gambling, but we focused on past offences. The idea was to build up evidence, then obtain a warrant and make the arrests.
We'd identify the den operators — the bosses — and the fixers who set up the venues. We'd investigate the gambling clientele. And, to avoid prosecuting the wrong people, we'd check up on alibis, investigate movements of funds in bank accounts, identify the hotels and houses where gambling took place — all the details. The better the initial investigations, the easier it was to join the dots and make the arrests.
But, actually, in the middle of doing this kind of work I started pushing myself too hard and eventually got very sick, with a really high fever. My wife was so shocked that she insisted we went to a large hospital. They had an internal medicine specialist and he decided I should be hospitalized. It was a sudden inflammation of the kidneys, and if it had become chronic, I could have died. I was stunned, because I thought I was very healthy, doing judo and all.
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They didn't have any medicine for it back then, so I just had to stop eating any kind of salt and rest. After a really tough month, my condition improved and I was moved into a large ward.
PHOTO = Action men: Police officers take part in a training exercise held to coincide with the Oct. 1, 2011, adoption by Tokyo Metropolitan Government of new antigang ordinances. KYODO PHOTO
I ended up becoming like the ringleader of the eight patients there, and I instituted a rule that we all laugh at least twice a day. Three months later the doctor congratulated me. Our ward had the highest recovery rate, he said, because I had made everyone laugh!
I've made a slight digression there, but I did that for a reason. I came to realize that an illness is not something a doctor fixes. First and foremost, patients themselves have to fix it. The key to a patient's success in doing this is the strength of their relationships — family, wife, children, parents, boss at work, seniors, colleagues. If you think a doctor and medicine alone will cure an illness, then you are making a big mistake.
So the most important "medicine" is the strength of your relationships and how you can draw on those, your mental state — the same qualities that make a good detective. For example, I think that experience taught me how to communicate with people in a way that encourages them to open up, and that was important.
How old were you when you got sick?
It was 1971. I was 26, and it was a year after I got married.
Did you return to the same police station after you left hospital?
Before getting sick, I had been going after the gamblers and so I had started working with key members of the police force's organized-crime department. After getting out of hospital, that was where I went back to.
Please describe the historical background of the bōryokudan.
The term "bōryokudan" itself didn't start being used until around 1960, but their DNA can be traced back to the end of the Edo Period (1603-1867) — the time of gambling and "heroes of the common people," like the famous (rice dealer turned gambling magnate) Shimizu Jirocho (1820-93).
Back then, power meant financial strength; the ability to command loyalty and settle disputes.
Gambling was permitted in shrine and temple grounds as long as a fee on winnings was paid to those shrines and temples. As the success of the silk industry introduced a cash economy into rural areas, it became more popular. Gambling operators established their own exclusive zones and hired thugs to keep rivals out. The gambling operators got rich and could start offering loans and, often, they presented themselves as saviors of the financially disadvantaged.
At the same time, a tradition was established at the start of the Edo Period by the first Tokugawa Shogun, Ieyasu, because he believed the best way to keep a lid on dissent was to use local strongmen. And so power gradually became concentrated in the hands of gambling operators. They even took on the role of law enforcement.
The other factor in the development of the gangs was the period of confusion after World War II, with the emergence of black markets and so on. That was when today's prominent groups all achieved their current states. Of course, the police force was under the control of the GHQ (the headquarters of the Allied Occupation from 1945 until it ended in 1952), so it was toothless.
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And then the bōryokudan went and started having gang wars among themselves. And the more they did that, then the more their image of power and menace grew and, often, young people were attracted to that.
Describe the work involved in pursuing bōryokudan. What did you do in the organized-crime department?
It's 80 percent investigation, 20 percent arrests and prosecutions. An important thing is not to get too focused on just one aspect. You should have a broader approach and pursue about two or three angles at a time. And you need to work as a team, you need to build up a picture from what all the team members can see.
When an incident occurs and the whole team kicks into action, then you compress about a year's worth of a suspect group's activity into an hour. Nowadays there are computers, so you can input all the information you have — connections, the money trail, movements, cars, recordings of phone calls — into a database and then you can see the whole pattern of an individual's actions. That becomes the foundation, and then you can say: "OK, this is what we know now. This is what we need to find out."
When was the time you felt most afraid for your personal safety?
I never did. Even when I went into a situation where there were guns, where the boss might be crazed and on drugs, there was no fear. In those situations, you focus your whole mind on two things: ma'ai (spacing, or distance) and timing.
PHOTO = Not welcome: A sign on the perimeter of the Tokyo Sky Tree site advertises the commitment of all the construction companies involved to ensuring no yakuza involvement in the project. YOSHIAKI MIURA PHOTO
Even after I started overseeing those kinds of operations, I remember that it was always the same. Once you've gained confidence with ma'ai and timing then the fear goes away.
Ma'ai is the distance, both physical and mental, between yourself and the other party. And then there is the timing — to make sure you don't unintentionally burst in on them. For the most part, bōryokudan members won't set out to do anything to a police officer. The cases where officers have been killed are generally when the bōryokudan members didn't intend it, but circumstances prompted desperate measures.
The situation where bōryokudan really are scary, however, is when they become what in medical terms you might call a cancer. When you can't see what they are doing, because they are using third parties and youths for their own gain; when they start to create systems that feed them funds indirectly, then that is dangerous.
What was the most satisfying moment in your career?
There was one incident, a really big incident that turned into a big scandal. I won't mention the names of the companies now, but it involved bid-rigging in the construction industry.
Bōryokudan and sōkaiya (people or groups paid to disrupt shareholder meetings, annual general meetings and suchlike) found out about the bid-rigging and the head of one company in particular, who was scared of them making that information public, paid them off. Of course, it just got bigger from there.
Next they came around threatening to reveal to shareholders that he had somehow generated funds to pay them off.
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The deeper he was drawn in, the more difficult it became for him to talk. This is an example of how the Japanese culture of shame can really have a negative effect. Anyway, our aim was to pursue an extortion case against the bōryokudan and sōkaiya.
The problem was that in order to make a blackmail case in Japan, you need the victim to file a complaint. That meant that the bid-rigging and the payments would come to light. Public trust in the company will be jeopardized.
And so we had to convince the company heads to talk. Over and over again, we had to assure them that we would guarantee their safety, protect the witnesses, the individuals. Eventually, the top of one company made a brave decision — he filed the complaint — and thanks to that, we were able to take down the entire network.
The company head acknowledged that he had panicked when he initially gave in to the bōryokudan. So, the most satisfying moment for me was when he said to me: "We were totally under their spell. And because you gave us the courage to shake off that spell, our company exists to this day."
In that case, I got him to talk, but the problem remains: Without a complaint, the police can't make a case. But these new ordinances go a ways to rectifying that situation (because paying an extortionist is itself now punishable).
Tell me about the new antigang ordinances.
Well, as of now every prefecture has such ordinances. They essentially impose an obligation to make an effort. We detectives used to say, "Please do this. Please tell us if this or that happens. You're not allowed to do this."
Now the regulations are saying that this is what we are all going to do. And if you don't fulfill your obligation, and you permit some sort of benefit to accrue to a bōryokudan — if you sell them office space or something — then you are going to pay a penalty. You won't get fined immediately, but you will be warned, and if you don't heed the warning, then we will make it known publicly what you are doing.
Your company will then lose the trust of the public, banks won't lend you money, your company will go bankrupt. You will be punished.
Will the ordinances not impinge on the ability of bōryokudan members to live in society as individuals? What if they take their family to a shop or a restaurant?
PHOTO = Take down: Officers foil a mock assassination attempt in a training exercise. KYODO PHOTO
The regulations are aimed at preventing acts that benefit bōryokudan as organizations.
Their key role is to eliminate uncertainty, so that all members of society can pro-actively try to protect the safety and peace of their lifestyles.
For example, in a situation where you suspect a person might be a bōryokudan member, your obligation is now to try and find out — your local Bōtsui Center or the police will help you. That way, the old reactions of just resigning yourself to victimhood, of giving in to fear and uncertainty will disappear.
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Getting back to your question: If a bōryokudan member takes his family to a restaurant, then I don't think it could be argued that that activity is providing a benefit to the bōryokudan as an organization.
But, if the boss of a group and all his underlings head off to a restaurant together and they stand up and go, "Hey, kanpai (cheers)!" then, yes, that activity could be interpreted as contributing to the power of the group, and thus the operator of that restaurant could be in trouble.
It seems the ordinances are focused on non-bōryokudan members who intentionally or not come into the bōryokudan orbit. Could lawmakers not make more laws that focus directly on the bōryokudan?
Hmm. You're right. But recently there have been efforts made in that direction. For example, the recognition of employer responsibility was particularly significant. That is, if an underling commits a crime then the boss can be held responsible for it.
Do you mean the 2004 decision?
Yes. It was a decision of the Supreme Court. That prompted big changes to be made to the Act on Prevention of Unjust Acts by Organized Crime Group Members. It also had a big influence on civil law too, as victims could then start pursuing damages cases all the way to the tops of those organizations.
As a police officer, did you ever wish there were more robust laws to prosecute bōryokudan?
I really think things are heading in the right direction now. Sure, you could make a law, but the moment you do that then you enter the realm of interpretations and limited definitions and judicial precedent. What's necessary is a change in the consciousness of the public.
Also, these recent ordinances are not an isolated measure. In June 2007, the government established the "Guidelines to enable companies to prevent damages caused by antisocial forces." Those don't have the force of law, but they do allow the government to exert pressure on the corporate sector.
The guidelines recommend that companies establish departments designed specifically to deal with unlawful requests from bōryokudan, and also that they include bōryokudan exclusion clauses in all their contracts (so if they discover after signing a contract with a company that it did have bōryokudan connections, they will be able to dissolve the contract).
Every industry has a regulatory authority within the government, and so the government is able to exert pressure on those who don't comply.
If you just said, "Let's exterminate the bōryokudan," and made a law to that effect, then it wouldn't work. First of all you need the public to cooperate, you need to strengthen the private business sector. The guidelines, and now the ordinances, are leading people in the right direction.
Are there any industries that will find it particularly hard to follow the ordinances?
Well, regarding the construction industry and the financial industry, efforts to eradicate the influence of the bōryokudan are really accelerating. In 2006, of course, the government decided to exclude bōryokudan or related groups from any public projects.
In the financial and real estate sectors, the guidelines are having an effect.
One area of concern is the operation of local festivals. The bōryokudan connections there go way back, and those areas lack coordination. But, the ordinances of course include festival operation, and in places like Ehime Prefecture (in Shikoku) they are already being utilized.
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PHOTO = No shame: Nakabayashi urges a Tokyo audience to talk to authorities about any problems they encounter with gangsters.
How about the entertainment industry? Will there be further noticeable changes to prominent television shows?
I wonder. If a broadcaster ascertains particular information about people on their shows, if they ascertain that influences are in play, then they will have to make a decision.
The talent agencies, too, are going to have to follow the guidelines and ordinances.
What is your advice for individuals who fear falling victim to bōryokudan?
If you're unsure, then from that moment, that moment of uncertainty, you should visit your local Bōtsui Center. The Bōtsui Centers are recognized by the National Public Safety Commission. They are manned by former police officers and others who have extensive experience dealing with bōryokudan.
The centers can recommend lawyers for civil cases, too. And we conduct training for business owners and corporations.
You mentioned that the existence of bōryokudan was a reason you joined the police force. What is the ultimate goal in dealing with the gangs?
One of the goals is a healthy society. That is the purpose of the recent ordinances. It's important not to lose sight of this.
What does it mean to have a healthy society? What it means is that you make a society in which people are not afraid of the shame that comes with admitting mistakes or dubious behavior, so feelings of guilt don't turn inward and turn into secrets.
That's the kind of thing the bōryokudan feed on, that is what makes them strong. The more you turn inwards, the more you need to put a lid on things, the worse things become.
And a healthy society is a safe society, as there is no gap between appearance and reality. If that happens, then the bōryokudan will become isolated, they will lose access to funds and they will disappear.
And of course, to achieve that we need to reintegrate former gang members into society. We need to work with the correctional facilities, prison councilors and public job-placement agencies.
The gangs reached their peak just one year after you joined the police force. Compared to then, how close is Japan now to realizing a "healthy society"?
Well, the ordinances are the latest indication of the seriousness with which society as a whole is trying to sever relations with the bōryokudan. The open gang warfare has obviously stopped. You don't see gang members parading through the streets like you used to. In those ways, things are a lot better than they used to be, and recent regulations and ordinances are heading in the right direction.
But, as I mentioned, bōryokudan are starting to become more sophisticated in their use of periphery organizations and companies, so now is not the time to drop our guard.
The website of the National Center for the Elimination of Bōryokudan is at www1a.biglobe.ne.jp/boutsui/.
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みかじめ料や脅迫、ゆすり、詐欺行為などを資金源にするヤクザという組織犯罪集団が、そのような市民的特性を持ちつのは一見不思議に思える。しかし、戦後すぐの時代から彼­らヤクザは日本の秩序を守るのに大きな役割を果たしてきた。ロバート・ホワイティングの「Tokyo Underworld」やティム・ウェイナーの「Legacy of Ashes」によると、日本の赤化を防ぐため悪名高いフィクサー、児玉誉士夫 にアメリカ政府でさえカネを払った。その後50年以上にわたって日本を支配した自民党を設立する資金も児玉が提供した。オバマ大統領が昨年訪日した際、警察は東京のすべて­のヤクザのリーダーと会合をもち、問題を起こさずおとなしくしているように要請したといわれている。
いくら否定しても、その強引なやり方で暴力団関与の臭いがプンプン。御用学者といい、組織暴力団といい、両者は人権を無視する日本社会で大いに商売繁盛。
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Conflict Over ‘Love Hotel’ Sale
A makeshift fence at Hotel Shine in Kawagoe, Japan, is intended to keep former workers away.
By HIROKO TABUCHI and STEPHANIE STROM
Published: October 1, 2012
KAWAGOE, Japan — Several years ago, an investment subsidiary of the agricultural giant Cargill bought a group of so-called love hotels, which typically rent rooms by the hour, including the neon-lit Hotel Shine in this sprawling Tokyo suburb.
Though many industry analysts say love hotels in Japan are a good cash flow business — catering to young married couples living with family, as well as to philanderers, prostitutes and even penny-pinching tourists — the Cargill subsidiary was disappointed with its results. The unit, CarVal Investors, sold the 10 properties last week for about $20 million, far less than the $60 million it paid for them in 2004 and 2005.
It might have been just another fire sale. After all, many American funds invested in distressed properties at the height of Japan’s economic woes without success.
But CarVal is now under fire from former employees and business partners in part because of the tough tactics of the new owner: an affiliate of a Japanese developer, the Kato Pleasure Group. Immediately after closing the sale on Thursday, the buyer dispatched groups of black-suited men to force out hotel workers and even hotel guests, barricading the entrances with wooden fences.
About 300 hotel workers have been left in the lurch. They are planning a rally outside Cargill’s Tokyo offices this week to protest their treatment. Two executives who managed the hotels under contract during CarVal’s ownership have refused to leave and remain inside Hotel Shine — a standoff that has drawn the attention of the local police.
The most vocal opponent of the sale, however, is CarVal’s former partner, Alchemy, which had a contract to manage the hotels. In registered letters, filed in court, Alchemy contends that CarVal violated business agreements by selling the properties before their contract was up in October 2014.
In submissions to both the local Tokyo and Saitama Metropolitan Police, Alchemy also contends that Kato Pleasure has ties to Japan’s criminal underground and that CarVal ignored repeated warnings — backed up by outside research — not to go through with the sale.
“Our complaint to CarVal is that they ignored credible advice that they were dealing with a suspected organized crime entity,” said Miro Mijatovic, Alchemy’s chief executive.
CarVal says Alchemy’s accusations are baseless. Kato Pleasure also denies that it has criminal links, but it provided little response to questions posed to a spokesman at its Tokyo headquarters and to company representatives at Hotel Shine. The new owner of the hotels is Plus Ten Mind, a company affiliated with Kato Pleasure that shares the same chief executive.
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Ann Folkman, a managing director at CarVal, said there were sound reasons to do business in the hotels. “While leisure hotels may sound salacious, they are a legitimate and longstanding industry that caters to the privacy needs of young Japanese adults, who frequently live with their parents or in company-provided housing,” Ms. Folkman wrote in an e-mail. “As with many of the hotels we have invested in across the world, the investment strategy was to run a compliant business, create sufficient scale and operational regularity and then exit to a buyer who could see the value of the business.”
CarVal’s exit came shortly after 3 p.m. on Thursday, when groups of men who said they were affiliated with Kato Pleasure made a coordinated sweep of the hotels, forcing out the staff, emptying hotel rooms of frightened guests, putting up makeshift fences and changing the locks in preparation to install Kato’s own management and workers.
Takashi Hayashi, the chief executive of Urban Resorts, a unit of Alchemy contracted to run the hotels’ daily operations, who has refused to leave Hotel Shine, seemed shaken as he spoke to a reporter through a tall fence on Saturday. He was flanked by two men who he said worked for Kato Pleasure, who refused to speak to a reporter. Around the compound, six workers were putting the finishing touches on barricades at the hotel’s entrances.
“I’m fine,” Mr. Hayashi said. “I have no intention of leaving.”
Ms. Folkman said CarVal had no involvement in the hotel sweeps. She suggested that Alchemy, which was hired in 2008 to manage the hotels, had encouraged the employees to remain to attract publicity. “We believe Alchemy’s dissatisfaction with the sale is motivating their behavior,” she said, “and we believe many of the claims they are making to The New York Times and others are wholly without merit.” She said that Alchemy was trying to protect its own business and that it had demanded 300 million yen ($3.9 million) to leave the hotels. The demand, she said, was “without any legal basis.” Alchemy, she said, has tried to disrupt the sale because it would like to buy the hotels.
Mr. Mijatovic countered that Alchemy’s agreement with CarVal had two years remaining and that his company had sought the money to make up for fees lost because of the early termination.
CarVal, which became a wholly owned subsidiary of Cargill in 2006 and now has $9 billion under management, was one of the first American companies to buy portfolios of bad loans and distressed properties after Japan’s real estate collapse in 1990. Since then, investors ranging from Goldman Sachs to smaller vulture funds have paid fire-sale prices for properties.
Love hotels, while tricky to manage, are attractive to investors because of their stable, strong cash flow and high yields. At Hotel Shine, about 3,000 yen, or $38, buys 90 minutes in a bland room dominated by a king-size bed. According to Leisure hotel, a trade publication, the industry has sales of 2 trillion to 3 trillion yen, or $38 billion, a year.
But in recent years, the hotels have attracted the Japanese mafia, big players in the real estate market.
Mr. Mijatovic, Alchemy’s chief executive, said he had passed along a report that Kato had links to organized crime to CarVal and to law enforcement authorities. CarVal said the report, commissioned by Alchemy and prepared by Kroll Advisory Solutions, a global corporate investigations and risk consulting company, lacked credibility.
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The report suggests that the Yamaguchi-gumi, Japan’s largest crime syndicate, has made a direct investment of 30 million yen in Kato Pleasure.
Mr. Mijatovic said his lawyers met Monday with the Tokyo Metropolitan Police to discuss information about Kato. Police officials declined to comment on whether they had held such a meeting.
Japan has recently strengthened its laws against doing business with organized crime. The United States Treasury has banned transactions between Americans and Yamaguchi-gumi.
The Kroll report also says Kato, a big company in the love hotel industry, is known for poor working conditions, including overtime work without pay. Takeshi Okubo, a 57-year-old cleaner at a hotel operated by Kato Pleasure in Osaka and a member of a local union, said labor violations were rampant, including unpaid overtime.
Ms. Folkman said the Kroll report and Alchemy had misrepresented Kato Pleasure’s business. CarVal’s legal team found the Kroll memo “vague and filled with innuendo,” she wrote.
She noted that Orix, a major financial services company in Japan, had brokered the sale. CarVal conducted its own research on Kato, she added, and concluded that it was a large, respected hospitality provider in Japan. Kroll declined to comment.
A separate, independent report by Teikoku Databank, a well-known credit research firm, previously cast doubt on Kato Pleasure’s business. The report, dated October 2011, said Kato Pleasure had an account with one small credit union in Osaka but appeared to have none at a major Japanese financial organization. That is generally a rarity for an established business in Japan and can be one sign of mafia ties, according to Hitoshi Suzuki, a lawyer who heads the anti-organized crime committee of the Daiichi Tokyo Bar Association. He cautioned that he was not familiar with the specifics of Kato Pleasure’s operations.
The report said Kato Pleasure had booked an operating loss of 9.2 million yen, or $118,000 in the early months of 2011. As a credit rating, the firm gave Kato Pleasure a failing grade of 39 points out of a possible 100.
An official at Kato Pleasure’s headquarters in Tokyo, who identified himself only as Kawamoto, said on Monday that the company had “absolutely no links” with the Japanese mafia. He called the sale of the hotels “entirely valid” and said it intended to proceed “without a fuss.” When a reporter tried to ask more questions, he hung up. Further calls to the company’s main number went unanswered on Monday evening.
Katsuyuki Suezumi, an official in Osaka at the leisure hotels department of Orix, which brokered the sale, said he was not authorized to comment on the deal. A list of questions sent to Orix headquarters in Tokyo was not answered on Monday.
Hiroko Tabuchi reported from Kawagoe, Japan, and Stephanie Strom from New York. Ken Belson contributed reporting from New York.
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"The construction industry is 90 percent run by gangs."(建設・土建屋の90パーセントがヤクザや暴力団関係)とある関係者の話。表を飾るエリートの政府や有名企業はまったく手を汚さずにすむシステム。その裏でヤクザや暴力団が仲介役として暗躍し、税金を食い物に大繁盛している労使システム。現在進行中の福島原発事故の処理事情は日本社会の裏をよく教えてくれる。
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Special Report: Japan's homeless recruited for murky Fukushima clean-up
By Mari Saito and Antoni Slodkowski
SENDAI, Japan Mon Dec 30, 2013 12:44am EST
(Reuters) - Seiji Sasa hits the train station in this northern Japanese city before dawn most mornings to prowl for homeless men.
He isn't a social worker. He's a recruiter. The men in Sendai Station are potential laborers that Sasa can dispatch to contractors in Japan's nuclear disaster zone for a bounty of $100 a head.
"This is how labor recruiters like me come in every day," Sasa says, as he strides past men sleeping on cardboard and clutching at their coats against the early winter cold.
It's also how Japan finds people willing to accept minimum wage for one of the most undesirable jobs in the industrialized world: working on the $35 billion, taxpayer-funded effort to clean up radioactive fallout across an area of northern Japan larger than Hong Kong.
Almost three years ago, a massive earthquake and tsunami leveled villages across Japan's northeast coast and set off multiple meltdowns at the Fukushima nuclear plant. Today, the most ambitious radiation clean-up ever attempted is running behind schedule. The effort is being dogged by both a lack of oversight and a shortage of workers, according to a Reuters analysis of contracts and interviews with dozens of those involved.
In January, October and November, Japanese gangsters were arrested on charges of infiltrating construction giant Obayashi Corp's network of decontamination subcontractors and illegally sending workers to the government-funded project.
In the October case, homeless men were rounded up at Sendai's train station by Sasa, then put to work clearing radioactive soil and debris in Fukushima City for less than minimum wage, according to police and accounts of those involved. The men reported up through a chain of three other companies to Obayashi, Japan's second-largest construction company.
Obayashi, which is one of more than 20 major contractors involved in government-funded radiation removal projects, has not been accused of any wrongdoing. But the spate of arrests has shown that members of Japan's three largest criminal syndicates - Yamaguchi-gumi, Sumiyoshi-kai and Inagawa-kai - had set up black-market recruiting agencies under Obayashi.
"We are taking it very seriously that these incidents keep happening one after another," said Junichi Ichikawa, a spokesman for Obayashi. He said the company tightened its scrutiny of its lower-tier subcontractors in order to shut out gangsters, known as the yakuza. "There were elements of what we had been doing that did not go far enough."
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Part of the problem in monitoring taxpayer money in Fukushima is the sheer number of companies involved in decontamination, extending from the major contractors at the top to tiny subcontractors many layers below them. The total number has not been announced. But in the 10 most contaminated towns and a highway that runs north past the gates of the wrecked plant in Fukushima, Reuters found 733 companies were performing work for the Ministry of Environment, according to partial contract terms released by the ministry in August under Japan's information disclosure law.
Reuters found 56 subcontractors listed on environment ministry contracts worth a total of $2.5 billion in the most radiated areas of Fukushima that would have been barred from traditional public works because they had not been vetted by the construction ministry.
The 2011 law that regulates decontamination put control under the environment ministry, the largest spending program ever managed by the 10-year-old agency. The same law also effectively loosened controls on bidders, making it possible for firms to win radiation removal contracts without the basic disclosure and certification required for participating in public works such as road construction.
Reuters also found five firms working for the Ministry of Environment that could not be identified. They had no construction ministry registration, no listed phone number or website, and Reuters could not find a basic corporate registration disclosing ownership. There was also no record of the firms in the database of Japan's largest credit research firm, Teikoku Databank.
"As a general matter, in cases like this, we would have to start by looking at whether a company like this is real," said Shigenobu Abe, a researcher at Teikoku Databank. "After that, it would be necessary to look at whether this is an active company and at the background of its executive and directors."
Responsibility for monitoring the hiring, safety records and suitability of hundreds of small firms involved in Fukushima's decontamination rests with the top contractors, including Kajima Corp, Taisei Corp and Shimizu Corp, officials said.
"In reality, major contractors manage each work site," said Hide Motonaga, deputy director of the radiation clean-up division of the environment ministry.
But, as a practical matter, many of the construction companies involved in the clean-up say it is impossible to monitor what is happening on the ground because of the multiple layers of contracts for each job that keep the top contractors removed from those doing the work.
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"If you started looking at every single person, the project wouldn't move forward. You wouldn't get a tenth of the people you need," said Yukio Suganuma, president of Aisogo Service, a construction company that was hired in 2012 to clean up radioactive fallout from streets in the town of Tamura.
The sprawl of small firms working in Fukushima is an unintended consequence of Japan's legacy of tight labor-market regulations combined with the aging population's deepening shortage of workers. Japan's construction companies cannot afford to keep a large payroll and dispatching temporary workers to construction sites is prohibited. As a result, smaller firms step into the gap, promising workers in exchange for a cut of their wages.
Below these official subcontractors, a shadowy network of gangsters and illegal brokers who hire homeless men has also become active in Fukushima. Ministry of Environment contracts in the most radioactive areas of Fukushima prefecture are particularly lucrative because the government pays an additional $100 in hazard allowance per day for each worker.
Takayoshi Igarashi, a lawyer and professor at Hosei University, said the initial rush to find companies for decontamination was understandable in the immediate aftermath of the disaster when the priority was emergency response. But he said the government now needs to tighten its scrutiny to prevent a range of abuses, including bid rigging.
"There are many unknown entities getting involved in decontamination projects," said Igarashi, a former advisor to ex-Prime Minister Naoto Kan. "There needs to be a thorough check on what companies are working on what, and when. I think it's probably completely lawless if the top contractors are not thoroughly checking."
The Ministry of Environment announced on Thursday that work on the most contaminated sites would take two to three years longer than the original March 2014 deadline. That means many of the more than 60,000 who lived in the area before the disaster will remain unable to return home until six years after the disaster.
Earlier this month, Abe, who pledged his government would "take full responsibility for the rebirth of Fukushima" boosted the budget for decontamination to $35 billion, including funds to create a facility to store radioactive soil and other waste near the wrecked nuclear plant.
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Japan has always had a gray market of day labor centered in Tokyo and Osaka. A small army of day laborers was employed to build the stadiums and parks for the 1964 Olympics in Tokyo. But over the past year, Sendai, the biggest city in the disaster zone, has emerged as a hiring hub for homeless men. Many work clearing rubble left behind by the 2011 tsunami and cleaning up radioactive hotspots by removing topsoil, cutting grass and scrubbing down houses around the destroyed nuclear plant, workers and city officials say.
Seiji Sasa, 67, a broad-shouldered former wrestling promoter, was photographed by undercover police recruiting homeless men at the Sendai train station to work in the nuclear cleanup. The workers were then handed off through a chain of companies reporting up to Obayashi, as part of a $1.4 million contract to decontaminate roads in Fukushima, police say.
"I don't ask questions; that's not my job," Sasa said in an interview with Reuters. "I just find people and send them to work. I send them and get money in exchange. That's it. I don't get involved in what happens after that."
Only a third of the money allocated for wages by Obayashi's top contractor made it to the workers Sasa had found. The rest was skimmed by middlemen, police say. After deductions for food and lodging, that left workers with an hourly rate of about $6, just below the minimum wage equal to about $6.50 per hour in Fukushima, according to wage data provided by police. Some of the homeless men ended up in debt after fees for food and housing were deducted, police say.
Sasa was arrested in November and released without being charged. Police were after his client, Mitsunori Nishimura, a local Inagawa-kai gangster. Nishimura housed workers in cramped dorms on the edge of Sendai and skimmed an estimated $10,000 of public funding intended for their wages each month, police say.
Nishimura, who could not be reached for comment, was arrested and paid a $2,500 fine. Nishimura is widely known in Sendai. Seiryu Home, a shelter funded by the city, had sent other homeless men to work for him on recovery jobs after the 2011 disaster.
"He seemed like such a nice guy," said Yota Iozawa, a shelter manager. "It was bad luck. I can't investigate everything about every company."
In the incident that prompted his arrest, Nishimura placed his workers with Shinei Clean, a company with about 15 employees based on a winding farm road south of Sendai. Police turned up there to arrest Shinei's president, Toshiaki Osada, after a search of his office, according to Tatsuya Shoji, who is both Osada's nephew and a company manager. Shinei had sent dump trucks to sort debris from the disaster. "Everyone is involved in sending workers," said Shoji. "I guess we just happened to get caught this time."
Osada, who could not be reached for comment, was fined about $5,000. Shinei was also fined about $5,000.
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The trail from Shinei led police to a slightly larger neighboring company with about 30 employees, Fujisai Couken. Fujisai says it was under pressure from a larger contractor, Raito Kogyo, to provide workers for Fukushima. Kenichi Sayama, Fujisai's general manger, said his company only made about $10 per day per worker it outsourced. When the job appeared to be going too slowly, Fujisai asked Shinei for more help and they turned to Nishimura.
A Fujisai manager, Fuminori Hayashi, was arrested and paid a $5,000 fine, police said. Fujisai also paid a $5,000 fine.
"If you don't get involved (with gangs), you're not going to get enough workers," said Sayama, Fujisai's general manager. "The construction industry is 90 percent run by gangs."
Raito Kogyo, a top-tier subcontractor to Obayashi, has about 300 workers in decontamination projects around Fukushima and owns subsidiaries in both Japan and the United States. Raito agreed that the project faced a shortage of workers but said it had been deceived. Raito said it was unaware of a shadow contractor under Fujisai tied to organized crime.
"We can only check on lower-tier subcontractors if they are honest with us," said Tomoyuki Yamane, head of marketing for Raito. Raito and Obayashi were not accused of any wrongdoing and were not penalized.
Other firms receiving government contracts in the decontamination zone have hired homeless men from Sasa, including Shuto Kogyo, a firm based in Himeji, western Japan.
"He sends people in, but they don't stick around for long," said Fujiko Kaneda, 70, who runs Shuto with her son, Seiki Shuto. "He gathers people in front of the station and sends them to our dorm."
Kaneda invested about $600,000 to cash in on the reconstruction boom. Shuto converted an abandoned roadhouse north of Sendai into a dorm to house workers on reconstruction jobs such as clearing tsunami debris. The company also won two contracts awarded by the Ministry of Environment to clean up two of the most heavily contaminated townships.
Kaneda had been arrested in 2009 along with her son, Seiki, for charging illegally high interest rates on loans to pensioners. Kaneda signed an admission of guilt for police, a document she says she did not understand, and paid a fine of $8,000. Seiki was given a sentence of two years prison time suspended for four years and paid a $20,000 fine, according to police. Seiki declined to comment.
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In Fukushima, Shuto has faced at least two claims with local labor regulators over unpaid wages, according to Kaneda. In a separate case, a 55-year-old homeless man reported being paid the equivalent of $10 for a full month of work at Shuto. The worker's paystub, reviewed by Reuters, showed charges for food, accommodation and laundry were docked from his monthly pay equivalent to about $1,500, leaving him with $10 at the end of the August.
The man turned up broke and homeless at Sendai Station in October after working for Shuto, but disappeared soon afterwards, according to Yasuhiro Aoki, a Baptist pastor and homeless advocate.
Kaneda confirmed the man had worked for her but said she treats her workers fairly. She said Shuto Kogyo pays workers at least $80 for a day's work while docking the equivalent of $35 for food. Many of her workers end up borrowing from her to make ends meet, she said. One of them had owed her $20,000 before beginning work in Fukushima, she says. The balance has come down recently, but then he borrowed another $2,000 for the year-end holidays.
"He will never be able to pay me back," she said.
The problem of workers running themselves into debt is widespread. "Many homeless people are just put into dormitories, and the fees for lodging and food are automatically docked from their wages," said Aoki, the pastor. "Then at the end of the month, they're left with no pay at all."
Shizuya Nishiyama, 57, says he briefly worked for Shuto clearing rubble. He now sleeps on a cardboard box in Sendai Station. He says he left after a dispute over wages, one of several he has had with construction firms, including two handling decontamination jobs.
Nishiyama's first employer in Sendai offered him $90 a day for his first job clearing tsunami debris. But he was made to pay as much as $50 a day for food and lodging. He also was not paid on the days he was unable to work. On those days, though, he would still be charged for room and board. He decided he was better off living on the street than going into debt.
"We're an easy target for recruiters," Nishiyama said. "We turn up here with all our bags, wheeling them around and we're easy to spot. They say to us, are you looking for work? Are you hungry? And if we haven't eaten, they offer to find us a job."
(Reporting by Mari Saito and Antoni Slodkowski, additional reporting by Elena Johansson, Michio Kohno, Yoko Matsudaira, Fumika Inoue, Ruairidh Villar, Sophie Knight; writing by Kevin Krolicki; editing by Bill Tarrant)
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Tokyo police arrest 16 over yakuza-linked health insurance fraud
JIJI Nov 7, 2015 Japan Times
Tokyo police have arrested a total of 16 gangsters and others on charges of swindling municipal governments out of public health insurance money.
The arrested include Keitaro Mito, 49, boss of a group affiliated with the Tokyo-based Sumiyoshi-kai, a major yakuza crime syndicate, and Kazuo Hayakawa, 38, an executive at an information technology-related company.
The Metropolitan Police Department arrested Mito and 13 others Friday afternoon. Two more suspects were nabbed later.
On Saturday, police raided the Sumiyoshi-kai’s head office in Minato Ward as well as eight other sites.
According to the MPD, Mito and the others have been charged with defrauding four municipalities, including Tokyo’s Shinjuku Ward, of about \450,000 by filing for public health insurance payments on fake practices at an orthopedic clinic in the capital between August 2011 and June 2013.
The clinic, which closed in October 2013, filed insurance claims totaling some \27 million to cover service costs for about 350 patients during its two years in operation.
Authorities suspect that among those claims, there are more bogus ones that have not yet been uncovered, investigative sources said.
The sources also said that Mito’s group is believed to have carried out similar schemes with other orthopedic and dental clinics in Tokyo and Chiba Prefecture, possibly defrauding municipalities of as much as \100 million in total. The money likely went into Sumiyoshi-kai coffers, they added.