Tokyo Underworld (3 page)

One rather unexpected result of the crackdown was the resignation of the prime minister and his entire cabinet, and the
indictment of forty-three individuals, when it became known that executives of Showa Denko, a big fertilizer producer, had been bribing Japanese government officials for low-interest loans from a reconstruction financing agency. When the GHQ campaign against crime had run its course, however, the annual total of embezzlements, forgeries and fraudulent conversions had actually increased, as had the number of known underworld gangsters, as counted by the Japanese government’s Crime Prevention Bureau.

The problem was not just the chaotic times or the possible incompetence of Americans directing the prosecution, whose unfamiliarity with local language and custom no doubt put them at a disadvantage. The problem was also that the culture of corruption was too deeply rooted in Japan to be cleaned up overnight. Despite laws long on the books that banned bribery and Confucian ethics that deemed it immoral, handouts had existed as long as there had been village politics and village bosses to dispense patronage. In the Tokugawa Shogunate era, public servants had regularly supplemented their monthly stipends with ‘gifts’, the custom becoming so ingrained that the line between proper etiquette and downright bribery was often impossible to distinguish. The blurring of this distinction gave rise to cozy alliances of convenience among public leaders and private interests, which evolved further in the mid-nineteenth century when the parliamentarian system of government was adopted. Political parties, which controlled the lower house of Parliament and hence the national budget, grew so dependent on funds from the big financial combines for elections (as well as money and other help from the underworld) that corruption was all but inevitable.

Thus, periodic public scandals have been the rule, not the exception. In 1914, a massive bribery scandal involving Navy officials, the great trading house Mitsui Bussan, and two foreign companies – the German electrical giant Siemens and the British weapons manufacturer Vickers – brought down the government. Attempts by the authorities to suppress evidence (which included
the use of hired thugs to threaten witnesses) in regard to ‘gratuities’ paid under the table to a vice-admiral in charge of naval security to secure a contract to build a new cruiser, were undermined when an ex-Siemens employee, on trial in Germany for an unrelated matter, revealed his knowledge of the bribes in open court testimony. Following that were scandals involving Yawata Steel (1918), Teijin (1934) and the Showa Denko firm (1948), which set the stage for even more dramatic eruptions to come, including the Lockheed Aircraft payoffs of 1976 and the stock brokerage-related graft of the 1990s.

The GHQ’s ill-fated assault on the underground government was accompanied by a crackdown on crime committed by its own personnel that was only slightly more fruitful. It produced a number of dishonorable discharges, including that of an Army colonel court-martialed for selling nine dollars’ worth of cigarettes. But those responsible for the disappearance of large stores of diamonds – transferred to the custody of the US Army from the Bank of Japan and other venues – were never found; nor were those who had made off with the entire armory of the disarmed Tokyo police force sometime between 1945, when the GHQ disarmed the Metropolitan Police Department and placed the weapons in securely locked storage crates in a military warehouse in Yokohama, and 1946, when the crates were opened and the contents were discovered to be missing. Throughout it all, an assortment of small-time smugglers continued their operations from a downtown office building right next to the Provost Marshal’s office.

By the time the exercise was over, it had become increasingly clear that the new era of democracy and bilateral friendship being forged had a powerful, resilient underside. A pattern of illicit collusion had been established through an extraordinary mix of desperation and opportunism, and it was not about to go away.

Of the many black market ventures during the Occupation involving Japanese and Americans, perhaps none was quite as successful as a company known as Lansco, a bizarre Ginza-based ‘general store’ that was engaged in everything from illegal banking to gumball sales. Its founder was an ex-Marine sergeant from New York named Nick Zappetti, a thickset, swaggering Italian who, it might be argued, was as representative of his era as the kindhearted, chocolate-giving, children-loving GI of popular lore. Lansco was one of a series of memorable Zappetti ventures, of both the legal and illegal variety, that would highlight a long and quixotic career in the Far East.

Like many others in the Occupation netherworld, Zappetti came from a Depression-era background of poverty – in his case, the northern Manhattan Italian ghetto of East Harlem. He belonged to a family of eleven children who grew up in a cramped cold water tenement. Their father, an immigrant rough carpenter from Calebresia, made barely enough to feed everyone and pay the rent.

Zappetti was no stranger to crime, thanks to the Mafioso who controlled his neighborhood. Gaetano Luchese, better known as ‘Three-Finger Brown’, was a second cousin. Family acquaintances included Joe Rao, who was the ‘Boss of Booze’, ‘Trigger’ Mike Coppola, aka ‘King of the Artichokes’, and Joe Stretch, a mobster who had his own chain of restaurants. The doctor across the street sold bootleg whiskey, and the next-door neighbor was a professional hit man – as young Nick discovered one afternoon in 1935 at age fourteen when he attended the man’s funeral. The corpse had been laid out in an open casket in the adjoining flat and its face was burned a deep red.

‘What happened?’ he had asked his father. ‘Did he lie out in the sun too long?’

‘No,’ came the reply. ‘He died at Sing Sing last night in the electric chair. He was executed for murder.’

That was the kind of environment Zappetti had come from, a place where it was the cops who were regarded as the enemy and the robbers the role models in life. He believed that World War II was the best thing that ever happened, given the somewhat limited opportunities for advancement at home, for it got him into the military and all the way to Japan, where the choices for someone with brains and a larcenous heart were far more numerous.

Zappetti had arrived in Northern Kyushu in late August 1945 as a twenty-two-year-old first sergeant in charge of the aforementioned MAG-44 party assigned to commandeer the Omura Air Field near Nagasaki, where he had made the decision to occupy the geisha house instead of the abandoned base while awaiting reinforcements. In February 1946, when his Marine Corps hitch ended, he took a local discharge and assumed one of the 6,000 US government jobs available in the GHQ – which, ironically enough, was a post as an investigator for the Civil Property Custodian Section, a department created to oversee the return of property looted by Japan in other Asian countries to its rightful owners. In early 1947 he made a trip back to the United States and returned with a Ford convertible, inside of which he had concealed several sacks of lighter flints, a highly prized commodity in Japan. There were 20,000 flints in each sack, and he sold them on the Ginza black market for more money than the car had cost.

In August of the same year, he took time out to marry a Japanese woman. The event was such a rarity that film footage of him and his bride, an English-speaking dentist, was shown on the Pathé movie news – the announcer pointedly noting the existence of something called the Oriental Exclusion Act, which prevented Americans from taking such war brides home. By March 1948, however, he was back in full swing running an extremely lucrative black market beer operation in partnership with a predacious lieutenant colonel in charge of ration tickets in the Occupation Finance Office and a fellow investigator in the CPC, a nisei who spoke fluent Japanese and could communicate directly with the
city’s gang bosses. Once or twice a week they would take the ration coupons out to an Occupation-approved brewery, a rusting metal structure on the Sumida River in the eastern part of Tokyo where, for a fee paid under the table, a compliant Japanese clerk would quietly fill the order, in violation of GHQ rationing laws prohibiting individuals from making such large purchases. They would fill up a large military truck with hundreds of cases of beer and sell their goods to buyers at secluded warehouses and bombed-out factories around town for a profit of 40 cents a bottle. The next day, their beer would be displayed in the open-air markets.

Profits from such activities made it possible for him to buy a plot of land in the suburb of Fujisawa and build a large American-style house, where he ensconced his wife and two infant children. He had also acquired a fancy new car, a wardrobe of new clothes, and several mistresses, whom he would entertain at the Dai-Ichi Hotel, a Western-style establishment in Shimbashi built for the canceled 1940 Tokyo Olympics. One of his young lady friends was a law student, destined to become a successful attorney, who paid her law school tuition by providing Zappetti and his friends with oral sex on demand. There are those who vividly remember the sight of Zappetti being driven around downtown Tokyo in the backseat of an open convertible in broad daylight, drinking Champagne, and enjoying the X-rated ministrations of a semi-clothed female companion.

In early 1950, the beer operation was infiltrated by a zealous undercover detective from the MPD, which resulted in Zappetti’s arrest by the MPs and deportation. But it didn’t take long for the enterprising young New Yorker to make it back to Japan. Although his passport had been seized on his arrival in the United States and he had been subsequently booted out of his local congressman’s office when he had gone to ask for it back, he simply went to pay his respects to the local Mafia Office on 116th Street, between 1st and 2nd avenues. The bosses who ran the neighborhood were more than willing to help one of their own.

‘Don’t worry,’ said one of the men, a distant relative of the family. ‘We can take care of the situation.’

And they did. Shortly thereafter, the relative told him to fill out an application for a new US passport as well as one for a commercial entrant visa for Japan and to deliver the documents to a certain someone in the mayor’s office downtown. A few weeks later, Zappetti’s passport came in the mail, with a visa stamped inside.

Also helpful was a ‘business associate’ in the GHQ, a cryptographer from Brooklyn named Bob, with whom Zappetti had made preparatory inquiries before leaving.

‘You see the way it’s happening now,’ Bob had said at the time. ‘They got something called a Form 26. That’s a list of all commercial entrant visa holders who want to enter Japan. If there are any traitors or criminals on it, which means people like you, then the GHQ puts a check mark by it, meaning entry not allowed.’

‘Shit,’ Zappetti had said. ‘I’ll never get approved.’

‘Fortunately,’ Bob continued, ‘the list goes through my hands. If your name is checked off, all I have to do is switch it with someone else’s. That way you get in and some other poor slob gets his application rejected. Just call me when you get ready to come back and we’ll work something out.’

Zappetti placed his call and in June 1950 boarded a Northwest Airlines flight in New York City. Sixty hours later he landed at Tokyo’s Haneda Airport and passed through immigration without incident. After a brief unproductive visit with his wife, who had wearied of his philandering and his criminal ways, he moved into a small house in the southwestern part of Tokyo. Then he began cobbling together the venture that would take its own unique place in Tokyo underworld history.

By bribing someone in the 8th Army, Zappetti obtained a permit that allowed him to sell goods legally to authorized military personnel. He established a company and, in late 1950, set up shop in a two-story ferro-concrete building located on a broad West
Ginza avenue that was perpetually jammed with military personnel, street vendors and smoke-belching oil drum fires.

The new company’s name, Lansco, was a play on the first names of Zappetti and his new partners, a Russian Communist with a taste for booze and expensive cars, named Leo Yuskoff, whom Nick had met during his CPC days, and an entrepreneurial US Army lieutenant named Al, who was transferred back to the States shortly after the company began operations. Yuskoff was a stateless White Russian in his early forties who had been born in Kobe, Japan, where his parents had settled after fleeing the Russian Revolution. One of an estimated 500 White Russians living in Japan after the war, Yuskoff could read and write Japanese better than most natives. He was simultaneously a devout Marxist and a shrewd, dedicated businessman, capable of calculating complex profit margins at the drop of a hat.

Displayed on the ground floor of the Lansco building was a wide variety of merchandise: canned and dry goods, including silk, wool and imported London tweeds. There was assorted hardware and appliances, like Gibson refrigerators and Servo stoves, along with luxury items such as Capehart phonographs – all procured from the PX by legitimate or other means. Although the store would turn a huge profit, it had originally been intended for show – to deceive the MPs and disguise the important part of the operation, which was conducted upstairs and which was the business of illegal checks.

Among Lansco’s first clients was a major American shipping company with an office in Tokyo that was looking for bigger earnings on its cash reserves than the banks were paying – at the time, 5 percent. The company deposited $2 million in Lansco’s account at the Tokyo branch of the Bank of America, and Lansco sold dollar checks on that account to black market buyers for yen. The official bank rate had been fixed at 360 yen to the dollar in 1949 as part of a tight new SCAP policy following a period of wild inflation that had seen the currency balloon all the way from 15
yen. (The dollar would stay at the 360 level until 1973, when US President Richard Nixon took it off the gold standard and allowed it to float on the international market.) On the street, however, with demand high due to stiff currency exchange laws and restrictions, a dollar would fetch anywhere from 480 to 520 yen, which meant considerable profits for those with greenbacks to sell. Other Lansco clients included American and Canadian construction companies under US military contract who wanted a better exchange rate on their government-issued dollar checks than the banks were paying when they converted them to Japanese currency. Lansco would buy their checks at the rate of 420 yen to the dollar, then sell them on the street at 480–520 yen. Since the checks in question were seldom under $100,000 a piece, the company realized a substantial return on each transaction.