TOKYO -- In the heart of Tokyo's glitzy Roppongi district stands an eight-story cause of Japan's mammoth banking crisis. It is an office building that is generating no rent for its owner, who therefore cannot keep up with the mortgage and is burdening a lender with yet another bad debt.
"Our company has fought with this problem a lot in the past four years," said Sasaki, head of Togensha, a real estate company that grew rapidly during the economic "bubble" of the late 1980s.
At home and abroad, Japan is taking fire for moving so slowly to clean up a banking system saddled with close to half a trillion dollars in bad loans left over from the collapse of the bubble in the early 1990s. One of the reasons for that languid pace, many analysts say, is gangsters known as yakuza.
Some are squatters, some are real estate owners who refuse to pay, some are the hirelings of other property owners who use them to intimidate creditors and fend off foreclosure. Whatever the variation, they can add a new complication to the already immensely complex job of straightening out billions of dollars of loans gone bad.
Japan is known as possibly the world's closest thing to a no-crime society. The streets are safe at all hours; lost wallets and purses are returned to their owners intact. But operating in most any community of any size are the yakuza, organized into tight syndicates that profess to live by feudal codes of honor. Police estimate the gangs have about 81,000 members.
Members are recruited from the streets at young ages and swear loyalty to a boss, who in turn has loyalties to bosses above him. Many wear their hair in perms or have large body tattoos; some are missing their little fingers -- this voluntary amputation is a traditional way that a yakuza underling who is in trouble within his gang demonstrates beyond doubt his total commitment to the group.
In large part, the business of the yakuza is the standard fare of organized crime anywhere -- drugs, prostitution, protection. But much of Japanese society has long viewed the yakuza not only as criminals, but as necessary mediators and facilitators. Americans call on lawyers if they want to up the ante in a dispute; Japanese may call yakuza.
For instance, after car accidents, parties who feel that they should be compensated sometimes hire gang members to transmit the message to the other party. A visit from a yakuza member may resolve the matter quickly. Likewise, landlords may ask yakuza members to pay visits to tenants who refuse to leave.
During the "bubble" period, the yakuza took in cash from traditional activities and, like many Japanese, invested in real estate and the stock market. Some securities companies and banks actively sought business from cash-rich yakuza-affiliated groups, according to Raisuke Miyawaki, formerly in charge of the National Police Agency's organized crime division and now a corporate adviser.
But when the economic bubble burst and land and stock prices plummeted, banks were left with yakuza borrowers who refused to repay their loans or relinquish their assets, according to Miyawaki. For instance, when a company affiliated with an organized crime group could not repay a $5 million loan, a hotel the company owned was torn down in an act of defiance to prevent it from being auctioned off by the lender, according to police.
Other delinquent borrowers turned to the yakuza for protection from financial institutions seeking to reclaim their loans, sometimes even putting the gangsters on their boards, said Takakazu Nakamori, researcher at Teikoku Databank, a leading corporate research group.
Yakuza also were able to take advantage of ailing companies, said police. In one case described by police, the president of a car dealership in Hiroshima was badly in debt and could not repay his loans. Gang members first approached him under the pretense that they would intervene with his creditors for him. But soon they forced him to transfer ownership of three of his properties to a yakuza-affiliated company, by threatening his family, said police.
Another growing problem, said Sasaki, is yakuza squatters. When units become empty, yakuza will move in and refuse to leave. In addition to getting free office space, they sometimes sublet the space to get money, or they go to other tenants and announce that they are the new owners and should receive the rental payments, said Sasaki. He said he also has seen gangsters move into his empty condominiums, because they like to live for free in the luxury apartments.
Sasaki said that out of 1,200 rental units his company owns, 75 have been "occupied" and 45 of those occupants have "direct links" to gangsters. Sasaki said he has filed about 30 court suits and has won most of them, enabling him to retake about 38 units. But he said that even with the court decisions, "I used force to take back these units."
It worked like this: After winning a court decision, he went to the yakuza-occupied units with "business associates" and four or five off-duty policemen he had hired. When the group appeared with the court order, the gangsters left. "Otherwise they would have been arrested," Sasaki said. He said he then left his business associates there for a week or so, as a show of force to discourage the yakuza from returning.
Analysts said most banks and real estate developers have been hesitant to take on gangsters in such an aggressive manner for fear of retaliation. Gang members sometimes carry guns, and have been linked to crimes against executives. Indeed, Sasaki said he has not tried to clear out the Roppongi building, which he said is entirely occupied by gangsters, for that reason.
A reporter visited the building but got no answer at its locked front door.
Indeed, the murder last year of a Sumitomo Bank executive rattled many business people. The gun used belonged to a former gang member, police said. A vice president of Hanwa Bank also was shot to death. Since the early 1990s, there have been at least 44 attacks on Japanese companies and executives, according to an article in the Tokyo Journal by David Kaplan, author of a book on the yakuza. Police said many of these attacks are still under investigation.
Another twist on the yakuza connection is that some banks have used gangsters to collect loans, said Nakamori. He said one reason these banks don't want to take on the yakuza who are occupying their buildings is fear the yakuza will disclose past relationships with the companies. Several banks contacted by The Washington Post declined comment on yakuza questions.
Because court suits to evict yakuza members are considered civil matters, they are not made public, making it difficult to determine how many such suits have been filed. But Miyawaki said a conservative estimate was 10 percent of the country's bad loans are "definitely yakuza-related" and another 30 percent are "suspect."
The problem is taken seriously by a senior banking official at the Finance Ministry, according to Miyawaki. The official met about two weeks ago with Miyawaki, who said the official seemed committed to tackling the yakuza problem and sought advice on what role police and prosecutors should play.
The Ministry of Finance declined to comment, except to say, "We are aware of what the media has been reporting regarding the relationship between bad loans and gangs. However, we do not know the details of each case." The statement said the ministry would make every effort to collect the loans "with the help of related authorities, regulators, those in legal professions and experts in real estate transactions."
The issue does not appear to have high priority at the National Police Agency, which has about three dozen people in its organized crime control divisions. A national police official said there is no systematic method for ensuring that information reported to local police about yakuza reaches them.
"The police or prosecutors -- their ability to tackle the economic issues are far behind the yakuza," said Sasaki. Miyawaki said that the first needed step is more detailed disclosure of bad loans and other financial activities by banks. "The relationship between financial institutions and yakuza has been kept in a black box," he said. "This black box has to be broken. If all the Japanese public knows about this, then we can put a brake on the yakuza's freewheeling activities against financial institutions." Special correspondent Akiko Kashiwagi contributed to this report.
