Executive quits in Japan over payoffs to mob Extortionists got large sums

October 30, 1992|By New York Times News Service

TOKYO -- The president of Ito-Yokado, one of Japan's most successful retailing companies, resigned yesterday to take responsibility for large payoffs the company made to gangsters.

It was the latest demonstration of how the influence of organized crime has spread to the highest levels of Japanese society.

The executive, Masatoshi Ito, would not discuss the payoffs directly, saying they were under investigation. But his resignation and offer of an apology at a news conference were taken as a tacit acknowledgment that the company had, as charged by police, broken the law by paying hundreds of thousands of dollars to a group of professional extortionists known as sokaiya.

Ito-Yokado, the second-largest retailer in Japan, also controls the Dallas-based 7-Eleven convenience-store chain.

The president of 7-Eleven Japan, Toshifumi Suzuki, will succeed Mr. Ito as president of Ito-Yokado, the companies said.

Three senior Ito-Yokado officials, including the chief accountant, were arrested last week, along with three sokaiya affiliated with a major organized-crime group.

Although the payoffs reportedly came from the bank account of Mr. Ito's wife, he and other senior officials of the company have said they had no personal knowledge of the bribes.

Yesterday's events were particularly embarrassing because Ito-Yokado, which runs supermarkets and other retail stores in -- Japan, was honored last month by the Tokyo Stock Exchange as model corporate citizen.

The announcement also said a great deal about corporate values in Japan and attitudes toward corporate democracy. The affair showed not only how a highly respected company feared the mob but also how it feared open questioning from the public -- and was willing to pay huge sums to avoid it.

The way the sokaiya work is to threaten to disrupt annual meetings -- the only occasion when shareholders have an open forum for questioning a company's management -- unless they receive payoffs.

The payments are often disguised as a purchase of subscriptions to bogus newsletters or tickets to parties or sporting events. Sometimes the sokaiya use blackmail, threatening to disclose damaging information about improper corporate activities.

But the other side of the coin is that once they get the money, they do keep the peace at shareholders' meetings, shouting down and threatening shareholders who question the company's management.

The payoffs by Ito-Yokado reportedly were made to maintain order at its annual meeting in June. The meeting, in fact, lasted a perfunctory 29 minutes. But that is not unique to Ito-Yokado: The average length of such meetings is 25 minutes.

Police charged the three Ito-Yokado officials with paying the sokaiya 27 million yen, or about $220,000, after the meeting. But numerous reports have said payments totaling about $850,000 were made.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.