Tokyo Underworld (30 page)

Mizuno himself strenuously denied having any underworld alliances, as well as possessing any Korean blood. Although the suspicions of the authorities were never proven, a Ministry of Finance investigation in 1992 found Mizuno had illegally funneled over 32 billion yen to the United States, and the year after that, a US federal court would indict him for money laundering. By that time, however, Mizuno had already been arrested in Tokyo for another crime: the fraudulent selling of golf club memberships. In one of his numerous golf course development projects, he had sold 52,000 memberships to an exclusive Japanese country club that claimed to allow only 2,800 memberships, raking in over a billion dollars – a crime for which he would eventually be convicted and sentenced to prison.

Mizuno’s choice of careers in Japan was especially telling. During the roaring eighties, the business of developing new golf courses, or rescuing financially distressed ones, was notorious for being under the influence of organized crime, leaving golf entrepreneurs often at the mercy of mob-run real estate firms and underground money lenders.

Americans, in or out of Japan, were not immune to the sting of the
keizai yakuza
, as a series of notable incidents in the 1980s demonstrated. Notable among them was a scam perpetrated on the Tokyo branch of a leading New York-based bank.

It all started when a private communications company approached the bank for a loan of $20 million. The company had been given official approval from the Post, Telephone and Telegraph Ministry to establish a series of new satellite broadcasting
receiving stations; the money was needed, the company executives said, to buy trucks and other equipment and to begin the construction. The request came complete with the approved architect’s drawings and specifications for each site. Since all the documents were in order and bore the ministry’s stamps of approval, the loan was granted.

The new director of the bank’s Tokyo branch, a tough-minded American who, by law, must remain nameless, along with his bank, waited in vain for several months for the first payment to come through. After several attempts to extract information from company executives, he hired a team of private investigators, who eventually discovered the entire project was a myth. Even the receipts for trucks allegedly purchased from Toyota and offered as evidence of good faith to gain an installment on the loan turned out to be fraudulent. Toyota reported it had never made trucks with such serial numbers. The private detectives also uncovered the interesting fact that two high-ranking members of the LDP were major shareholders in the firm.

The bank manager decided to sue and filed preliminary court papers in Sapporo, which was the prefecture in which one of the mythical satellite receiving sites was to be located. It was then that the American was summoned to the Ministry of Finance, of all places, to receive a long lecture about how he did not ‘understand’ Japan and how it would be best for his bank’s future in the country, not to mention his career, if he withdrew the suit. He refused and was thereafter summoned several more times for additional warnings, which he also ignored. During one such visit, at a time when the manager’s wife was visiting Hong Kong, a MOF official remarked that if the American continued being so obtuse, the wife might never be allowed to return to Japan.

Then he began getting anonymous threatening calls at home.

‘You don’t know what you’re getting into,’ a strange-sounding man would say in English. ‘You’re in over your head. You’re in dangerous waters. Think about the welfare of your family.’

To keep up the pressure, the lawyers on the other side kept delaying the start of the trial, but finally, after several months, they ran out of legal maneuvers and a definite date was set to begin the hearings. It appeared the whole incredible fraud, together with the involvement of its prominent LDP participants, was about to be revealed to the public, when the nefarious but influential borrowers caved in. After a number of clandestine meetings, they agreed to repay the $20 million in return for the withdrawal of the suit and a legally binding agreement never to reveal the details of the case. The final $250,000 or so of the repayment, in bundles of 10,000-yen notes in a paper bag, was passed between two cars in Tokyo’s Hibiya Park at 10.00 at night. To this day, the American banker involved refuses to discuss the case.

Then there was the yakuza-backed company that in 1985 began selling memberships in a yet unfinished ‘Bob Hope Golf Club’, which Zappetti’s friend, the American Rick Roa, worked for. In 1985, he became sales director for the new Tokyo-based corporation, ‘Bobu Hopu Eiko Kaihatsu’, commissioned to solicit clients for the projected Bob Hope Golf Course scaled to be built in Ibaragi, to the northeast of Tokyo.

Hope was famous in Japan for the film
Road to Bali
, among others, and the entertainer, Roa was told, had been paid $500,000 for the use of his name.

The company chairman was a short, chubby Japanese man in his fifties named Zenya Hamada. On the walls of his office in Harajuku were photos of him with Hope in a reception at the Hotel Okura and another one with the Roman pope – the executive decked out in a formal kimono with white socks, a
geta
, and a fan in the belt. There were also photos of the beautiful piece of land where the golf course would be located, while brochures on the table listed the names of the members of the honorary board of governors; included were Alan Shephard, Henry Ford, and the presidents of Coca-Cola and American Express.

Roa recruited and trained a sales force, comprised mostly of the
wives of foreign businessmen, who had wearied of
ikebana
and tea ceremony lessons, Tokyo Tower tours and lunches at the American Club. Then he discovered that (a) the aforementioned members of the board had not given permission to use their names; (b) the property for the golf course had not even been bought yet; and (c) the real backers of the company were an organized crime group. Yakuza.

The catalyst for these revelations was a Japanese magazine article about the chairman and a similar venture he had run years before, at that time with an unsuspecting Jack Nicklaus, in which a small fortune had been wasted. When that story came out and Bob Hope’s lawyers started calling, Hamada, like many other Japanese gangsters, politicians and businessmen accused of a crime, checked into a private hospital room, where he slipped into his kimono, turned on the TV, and sipped
mizuwaris
, remaining incommunicado with the outside world.

When the Hope side terminated the relationship, Roa was left with the unpleasant task of ensuring that those who had bought memberships were reimbursed. For help, he was forced to turn to his old friend, Mr Tanaka at the TSK organization, who somehow pulled some strings and got the job done.

Scam number three involved the tall, courtly, silver-haired Susumu Ishii, who had taken over as boss of the nation’s second largest gang, the Inagawa-kai, after his release from prison in 1985. A veteran of the Pacific War, where he had served in the human torpedo unit of the special forces, Ishii had also been a disciple of Yoshio Kodama, fighting against the leftists in the 1960 Security Treaty disturbances before going into the tourist business with his friend, the transportation and hotel tycoon Kenji Osano.

Ishii was the quintessential
keizai yakuza
. On becoming boss of the 7,000-member Inagawa gang, he formed an investment company called Hokusho Sangyo, soliciting large sums of capital
from major business firms in return for his ‘protection’, which he then invested on the gang’s behalf in land and securities. His insider trading schemes brought billions and billions of yen into the gang’s coffers.

Like the Sumiyoshi’s Kusuo Kobayashi before him, ganglord Ishii had played his own role in electing a prime minister, when he stopped a neofascist right-wing group from disrupting the 1987 campaign of LDP presidential candidate Noboru Takeshita (a member of the Kakuei Tanaka faction); Takeshita was subsequently victorious. Ishii was also instrumental in arranging for millions of dollars in illegal donations to LDP politicians, through a trucking company he was affiliated with, known as Sagawa Kyubin. One of the beneficiaries of the largesse was an aging, dour, behind-the-scenes kingmaker named Shin Kanemaru, who had helped Takeshita take over the powerful Tanaka faction in the wake of Tanaka’s failing health. It was later revealed that Kanemaru received some several billion yen from Sagawa. (In one transaction, 500 million yen of it, in cash, was loaded onto a dolly and hand-delivered to Kanemaru’s office.)

The way that legitimate and illegitimate forces intertwined in the Ishii universe was truly fascinating. At the subsequent trial of an executive from said trucking company, there was open court, matter-of-fact testimony by an Inagawa gang associate as to the intimate relationship that existed between the LDP and the yakuza underworld. ‘It is’, he testified without batting an eyelash, ‘one of help, friendship, cooperation, and support.’

It was also very Byzantine. Consider the 1986 takeover by the powerful
zaibatsu
-owned Sumitomo Bank of the smaller Heiwa Sogo Bank, with which Ishii was deeply involved. The Heiwa Sogo had initially hired Ishii at considerable cost to ‘protect’ it from just such a takeover attempt. But Ishii had been prevailed upon to go along with the Sumitomo merger by the former prime minister and still influential LDP figure, Nobusuke Kishi. (It was as if Ronald Reagan, in retirement, had brokered a deal between the
Gambino Mafia family of New York and the Chase Manhattan Bank.)

In return for his acquiescence in the Sumitomo mugging of his client, Ishii was offered the as yet unfinished Iwama Golf Course north of Tokyo and granted a low-interest loan to pay for the completion of the development work. The purchase of the golf course by Ishii was financed by the trucking delivery company, and the development loan was supplied by the Nippon Credit Bank, an institution where Yoshio Kodama had once served as director. The chief auditor of the Heiwa Sogo bank, Shigeki Isaka, the man whom Ishii ultimately betrayed to achieve the merger, was a former public prosecutor who also happened to be Ishii’s lawyer.

Ishii immediately printed up club membership certificates for the undeveloped public golf course and used them as collateral to secure some 300 billion yen more in loans from the big Japanese brokerage houses and various non-banks. The Big Four Security giants, Nomura and Nikko (the largest in the world, with ten times the employees of Merrill-Lynch), Daiwa and Yamaichi, controlled up to three-quarters of the market volume in Japan and seemed to be able to drive prices up virtually at will – by ramping a given stock. Ishii used the money he had borrowed from the brokerages to purchase 24 million shares of equity in the Tokyu Corporation, a private railway, hotel, and department store conglomerate, knowing from inside sources that the stock would rise because of imminent policy and managerial changes. Within weeks of making his block purchase, in the fall of 1989, the price of a single share of Tokyu did indeed rise from 1,700 to 3,060 yen.

Those who wondered how it was that Ishii would be able to secure such huge loans on such questionable collateral – Nomura alone ponied up $14 million, despite the fact that the golf memberships would have no resale value until the club was completed – got their answer when it was discovered that the major brokerage houses involved also bought the Tokyu stock and then sold it for a tidy profit.

Given the vast riches they were accumulating, it was not surprising perhaps that Ishii and the Inagawa-kai would branch out to the United States, with its wealth of new opportunities. There they would purchase a reported several billion dollars’ worth of real estate, among other things. What was surprising, perhaps, was the unprecedented aim that the organization would take at the highest levels of the American social and political structure.

In February 1988, representatives of a Tokyo-based real estate company, West Tsusho, which was a front for the Inagawa-kai, approached Prescott Bush, the elder brother of then US vice president and soon-to-be president George Bush, who ran a prestigious consulting and real estate firm based in Manhattan. The president of West Tsusho, one Sampei Koyanagi, had been introduced to the elder Bush by a mutual acquaintance, a New York City jewelry store manager.

Bush signed on as a consultant, and in July 1989 he arranged for West Tsusho to buy into a New York-based international financial services company called Asset Management International Financial Settlement (AMIFS). He received a $250,000 fee for his services and then took a position as a senior adviser to the firm, supplying a $2.5 million corporate guarantee that the initial investment made by West Tsusho would be recovered within five years.

Bush also helped his new corporate client to purchase 1 million controlling shares of a Houston-based software company, Quantum Access and, after that, to buy 100 acres of land in New York’s Rockland County for development into a golf course, which would be designed by Gary Player for a fee of $500,000. The auspicious occasion was celebrated with a posh reception held at New York City’s exclusive 21 Club.

Bush even came to Japan in March 1991 and was feted at a lavish dinner held at the Hotel Okura’s luxurious Chinese restaurant by executives of West Tsusho’s parent company, Hokusho Sangyo.

It was then that Hokusho Sangyo President Munenobu Shoji suggested Prescott arrange a White House audience – ‘president to
president’, as it were. Prescott refused, adding that he was ‘appalled’ by the request, whereupon, according to court papers, West Tsusho executives threatened to withhold further investments ‘unless Bush showed proper respect by complying with their leader’s wishes’.

What Bush did not know was that both his client company and its parent were Inagawa-kai fronts, which meant, in effect, that he was employed by the third largest crime syndicate in Japan.

It was only several weeks later that Bush learned of his unwitting yakuza ties when Japanese police began investigating Hokusho Sangyo for violation of foreign exchange laws and the press began publishing details of the unusual relationship. He quickly backed out of the venture, only to find himself sued by his former employers for a $2.5 million breach of contract. The brazenness of the new
keizai yakuza
knew no limits.