Sōkaiya

Sōkaiya (総会屋, sōkaiya) (sometimes also translated as corporate bouncers, meeting-men, or corporate blackmailers) are specialized racketeers unique to Japan, and often associated with the yakuza, who extort money from or blackmail companies by threatening to publicly humiliate companies and their management, usually in their annual meeting (総会, sōkai).

Conversely, if they are paid, they will work to prevent others from embarrassing the company, either through intimidation or by disrupting the meeting so they cannot be heard.

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, called sōkaiya, to reduce the risk of such rumors. Even after the Japanese laws included 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. In that respect, they have even been compared to corporate lawyers in America.[1]

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

In 1994, Juntarō Suzuki, vice president of Fujifilm, was murdered by sōkaiya after he stopped paying these bribes.[2]

Activities

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 in detail beforehand to uncover incidents of misconduct or other company secrets, and then blackmail 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 disproving.

Modern sōkaiya have developed other, similar methods to accomplish their goals. One less subtle 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.

Other disruption

Sōkaiya also form fake 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 at inflated prices, or even to subscribe to these newspapers, generating a steady flow of cash.

Preventing disruption of shareholder meetings

Sōkaiya have also been used by companies to drown out questions from legitimate shareholders which company officials do not want presented. One infamous case is related to Minamata disease (mercury poisoning), where the Chisso chemicals company managed to close a number of annual meetings within minutes even though hundreds of protesters wanted to voice their anger. They have also been active against anti-war protesters and other people who may be viewed as a nuisance by the company at a particular time.

Countermeasures

Article 968 of the Japanese corporations code prohibits sōkaiya activity, imposing imprisonment of no more than five years or a fine of no more than ¥5 million for "receiving, demanding or promising a proprietary benefit with regard to" statements or the exercise of voting rights at a shareholder or creditor meeting.

A practical countermeasure used by large corporations is to hold all shareholder meetings on the same day, so sōkaiya cannot disrupt all of them.

Background

While in the West a 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, with the trend for more deregulation in the Japanese market the business environment for sōkaiya is getting more and more difficult.

Companies that have bribed sōkaiya

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

References
  1. Szymkowiak, Kenneth (2002). Sokaiya: Extortion, Protection, and the Japanese Corporation. East Gate Book. ISBN 978-0-7656-0780-5.
  2. Sōkaiya and Japanese Corporations, Eiko Maruko, Electronic Journal of Contemporary Japanese Studies, 25 June 2002
  3. "Japan faces fresh scandal - Corporate Japan finds cutting racketeer ties tough". CNN Money. March 1997. Retrieved 2007-03-18.
  4. "Sokaiya scams hit Japan - Japanese companies ill-equipped to deal with corporate extortionists". CNN Money. December 1997. Retrieved 2007-03-18.
  5. "Executive quits over gangster charges". BBC News. 2002-11-21. Retrieved 2007-03-18.
  6. Tamae K. Prindle; M.E. Sharpe (1989). "Made in Japan" and other Japanese business novels.CS1 maint: multiple names: authors list (link)

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
  • Szymkowiak, Kenneth, "Sōkaiya Criminal Group and the Conflict for Corporate Power in Postwar Japan", Asia Profile, Vol. 20, No. 4, August, 1992
  • Szymkowiak, Kenneth, "Sōkaiya: An Examination of the Social and Legal Development of Japan's Corporate Extortionist", International Journal of the Sociology of Law, Vol. 22, 1994
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