It highly incentives firms not to cooperate or collude with organized crime, much as the revisions to the commerce law in December 1997, made it unacceptable for large listed companies to pay off
sokaiya ([TEXT NOT REPRODUCIBLE IN ASCII]), a/k/a racketeers.
In addition, the
sokaiya, (7) which often have strong ties to the yakuza (Japanese mafia), have pursued a significant number of derivative actions in Japan.
In 1997, Doi stepped down as chairman to take responsibility for a payoff scandal involving ''
sokaiya'' racketeers.
OSAKA - Prosecutors on Monday arrested on suspicion of fraud a former prosecutor who is known to have had links with underworld figures such as gangsters, stock speculators and ''
sokaiya'' corporate racketeers.
For example, when I worked in Japan, organized crime members (known as
sokaiya) would buy shares of stock in a company so that they would have the right to attend shareholder meetings, which these criminals would then threaten to disrupt if not paid to stay away or keep quiet.
"
Sokaiya Scandals, Economic Woes Spotlight Japanese Corporate Governance." JEI Report January 23.
Even though shareholder meetings of Japanese companies have been historically friendly and quiet, they have also contended with professional disrupters, known as
sokaiya, who demand hush money from corporations involved in scandal.
This practice used to be the norm because companies said they wanted to limit the effect of
sokaiya, or corporate extortionists who disrupt shareholders meetings, but today, more companies are scheduling their meetings at different times.
The fear of abuse of derivative litigation is probably even stronger in Japan than elsewhere due perhaps to the past role of "
sokaiya" racketeers (52) in extorting money from corporate management and a general reluctance to place substantial liability on individual directors who, in most cases are merely employees who have risen through the ranks.
Nomura Securities Co., which illegally compensated major investors for investment losses and provided profits to ''
sokaiya'' corporate racketeers in the 1990s, opened a ''compliance hot line'' in October 1997, through which employees witnessing or hearing unlawful acts and acts violating internal policies can inform outside lawyers through anonymous telephone calls.
One particular example of the influence of such institutions is the
sokaiya. A
sokaiya (literally, "general meeting operator") is usually a nominal shareholder who either attempts to extort money from a company's managers by threatening to disrupt its annual shareholders' meeting with embarrassing or hostile questions, or works for a company's management to suppress dissent at the meeting.
Kubota's payoffs to so-called ''
sokaiya'' racketeers who target companies came to light last year.