[FOUNTAIN]From Japan Inc. to ganglandJapan's dire economic condition topped the agenda at the beginning of the World Economic Forum in New York last week. International financial leaders poured out negative opinions on Japan's economic situation, saying Japan is the "biggest risk to the global economy in 2002," and the Japanese economy may be crippled for good.
What made Japan, the economic star of the 1980s, lose its glory? There may be more than one reason, but one interesting opinion that is worth examining is that yakuza, Japan's organized crime rings, are partly responsible for the nation's flood of bad debts, which is the primary reason Japan is stuck in recession.
The theory was first presented by Reisuke Miyawaki, a retired police chief, 10 years ago, according to the Jan. 17 edition of the Far Eastern Economic Review. Mr. Miyawaki, a graduate of Tokyo University law school and former head of the National Police Agency's organized crime division, argues in his many speeches and opinion contributions to newspapers that up to 50 percent of the bad debts held by Japanese banks involve organized crime and corrupt politicians.
In a speech at the Woodrow Wilson Center three years ago, Mr. Miyawaki contended that such loans had exceeded 100 trillion yen ($750 billion).
"I watched this develop in front of my eyes before I retired" in the 1980s, he says. "The key issue is that a large portion of the bad loans cannot be recovered solely by bankers because the original loans involved politicians, bankers and yakuza."
According to the article in the Far Eastern Economic Review, banks first approached crime syndicates, not the other way around. In the 1980s, large firms, Japanese banks' biggest borrowers, turned to overseas sources for cheaper loans, and Japanese banks began aggressively looking for new borrowers, the article says.
For yakuza, this was an opportunity to shift away from prostitution, drugs and gambling and enter legitimate businesses. But the bubble burst in 1990s. Japanese banks, which were accustomed to dealing with gentle customers, did not realize whom they were doing business with. Yakuza often did not pay back loans. Since 1997, seven bank executives recovering debts or government officials who were investigating illegal loans died under mysterious circumstances, the magazine says.
The yakuza recession may presage what lies ahead for Korea. Audiences swarm into movies depicting organized crime, and political scandals involving crime rings are rampant.
The writer is an editorial writer of the JoongAng Ilbo.
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