Violent attacks a growing risk at Japanese firms

September 18, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau of The Sun

TOKYO -- Early last year, Molotov cocktails were tossed at the central Japan homes of several top executives of the Sumitomo Bank, one of the world's largest financial institutions. No one was hurt, but in retrospect, it appears to have been a grim warning.

Last week, the attack was more focused. An employee who appeared to be the quintessential Japanese company man was shot through the head outside the door to his home.

Kazufumi Hatanaka, 54, manager of Sumitomo's Nagoya branch, had joined the Osaka-based bank shortly after graduating from college almost 30 years ago. He lived alone in a Nagoya apartment near his job while his family stayed in a home that he owned nearer the bank's headquarters. He was said to be an exemplary worker with a future in a top-rung office.

By themselves, the Molotov cocktails and Mr. Hatanaka's murder might be seen as isolated events. But in the months leading up to the fatal attack Wednesday, there were numerous other incidents involving Sumitomo Bank employees, none causing injury but some extremely serious. These ranged from threatening calls and razor blades in letters to gas bomb attacks and shots fired at a bank branch.

Any of these events constitute an extraordinary breach in the placidness of everyday life in Japan. Taken together, they suggest a small domestic war.

And Sumitomo might not be the only combatant.

Indeed, several companies recently have been hit by uncharacteristic violence. An executive of Fuji Film was murdered outside his home in February, as was an executive of (( the small Hanwa Bank in August 1993. Neither of these cases, nor any of the approximately two dozen involving Sumitomo and its affiliated companies, have been solved.

The mystery surrounding these crimes has only fueled the varied speculation and theories about its cause and underlying message.

At Sumitomo, stories persist that there are large implications in the recent incidents. The attacks, so the stories go, are part of a wrenching process occurring as companies adjust to the depressed Japanese economy by weaning themselves away from the more dubious associations and practices that were common during the booming past decade.

Sumitomo had been one of the most aggressive lenders during the fervid mid-to-late 1980s -- the so-called "bubble economy" -- particularly in real estate and construction. Both were areas closely linked in Japan with organized crime, said David Kaplan, a Fulbright scholar who is updating a seminal book published a decade ago on the Yakuza, Japan's Mafia, to encompass its link with legitimate businesses during the past decade.

The subsequent recession has left Sumitomo more than $5 billion in acknowledged bad loans on its balance sheet, and billions more already written off or yet to be classified.

"This may very well be an unmistakable message from the Japanese underworld to the Japanese banking world that you can forget about collecting on the bad debts incurred during the bubble economy," Mr. Kaplan said.

A spokesman for Sumitomo said no motive had been unearthed, nor was there any connection between the various incidents themselves or, in this case, the incident and the bank. But there were indications that it was being treated as a corporate affair.

Senior Sumitomo officials were scheduled to attend a funeral yesterday for their slain associate. Employees were shocked by the attack, and attention was now being focused on security, the spokesman said.

Otherwise, he emphasized, work was proceeding "firmly" and the bank's bottom line would not be affected, a conclusion drawn by several Tokyo-based security analysts as well.

In fact, given Sumitomo's size, no single area was likely to have a determinative impact on its performance.

The institution has almost $500 billion in assets, dwarfing even the largest U.S.-based banks, with a major retail presence not only throughout Japan but also in California. Outside investments include a significant stake in the U.S. investment bank Goldman, Sachs & Co.

But it's the specific operations at the Nagoya branch that have become a focus of speculation surrounding Mr. Hatanaka's death.

One of Mr. Hatanaka's responsibilities was debt collection at the branch, according to a report in the Yomiuri Shimbun, Japan's largest-circulation paper. It is a brutal job in the current environment and one, according to the Yomiuri, he occasionally found to be "too much."

Business at the branch might have been particularly difficult. Years before Mr. Hatanaka arrived, it was reported by the Yomiuri to have been where the relationship was established between Sumitomo and Itoman & Co. Ltd., once a trading house specializing in textiles, but later a major property developer.

Itoman ultimately collapsed in scandal, costing Sumitomo huge losses and leading to the 1990 resignation of Sumitomo's chairman, Ichiro Isoda. The trading company was subsequently absorbed by another affiliate of the bank in an arranged marriage.

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