COLUMN ONE : Coin Scam: A Japanese Gold Mine : When the government minted a tribute to the late emperor, it didn’t bank on an $80-million swindle. Maybe it should have read the TV script.

Joji Abe, a reformed yakuza bookmaker, ex-convict and now a popular novelist, says it didn’t require much imagination to conceive of the perfect counterfeiting crime. The Japanese government pointed the way.

Abe took writing inspiration from the Finance Ministry’s seemingly avaricious plan to generate quick revenue by minting a commemorative gold coin and selling it off to the general public--as legal tender--at a face value more than twice its actual gold content.

The government unloaded 11 million of these coins in 1986 and 1987, capitalizing on swelling private wealth and a nascent fever for gold in Japan. Each coin contained 20 grams (0.7 ounces) of pure 24-karat gold, now worth about $275, and had a face value of 100,000 yen, or about $700 at current exchange rates. The idea was to celebrate the 60th anniversary of the reign of Emperor Showa (Hirohito).

Abe figured it would be easy to share in the imperial windfall. All one had to do was acquire gold bullion and forge an exact replica of the coin from a mold of an original. He laid bare his criminal genius in a screenplay, dramatized last year on national television as “Gold Nugget Mission Impossible: The Urban Octopus Trap Master.”

Abe’s scenario was a prophetic one: Japanese officialdom has been reeling for weeks at disclosures that a counterfeit gang operating out of Switzerland, or perhaps somewhere in the Middle East, succeeded in making pure gold copies of the Emperor Showa coin that were so perfect that the Bank of Japan redeemed at least 103,000 of them.

“The forgery of that coin was inevitable--it was so painfully obvious it had to happen,” said Abe. “Who could resist the temptation of taking $275 to make $700?”

The real-life counterfeiting apparently started in early 1988, and the coins flowed into Japan under the cover of ostensibly legitimate foreign exchange transactions. Only at the end of last month, when a clerk at a downtown Tokyo branch of Fuji Bank noticed a slight discoloration in the plastic seal on one of the bogus coins, did the scam begin to unravel.

Intrepid Japanese investigators have since followed a trail of numismatists and currency speculators from Tokyo to London and to Lugano, Switzerland, a small town near the Italian border notorious for money-laundering. There, signs point toward a shady Panamanian trading company and mysterious contacts in the Arab world.

Where the case will lead from now is anybody’s guess, but one thing is certain: The Japanese government has been swindled out of about $400 for every counterfeit coin it redeemed. With estimates of the number of fakes in the central bank’s vaults at 200,000 or higher, total losses could exceed $80 million, apparently the largest coin fraud ever.

Although Swiss authorities are cooperating in the investigation, Abe (pronounced AH-bay) believes the perpetrators are Japanese and that they will get away with it. That was the case in his television drama.

“I’ll bet they never find the people who made the coins. I’ll even give you 20-to-1 odds,” Abe said. “These people are concealed behind a long chain of dealers and secret transactions. All it takes is for a single link in the chain to be broken and the police are at a dead end.”

The government, it appears, had been banking on tough criminal sanctions to deter forgery of the Showa coin.

The maximum sentence for currency counterfeiting in Japan is life imprisonment, noted Hiroyuki Ujikane, a bureaucrat in the Finance Ministry division that designed the Showa coin. Other precautions were taken as well, he said.

“When we struck the coin we took every technical measure available to us to prevent counterfeiting,” Ujikane said.

But Hironori Kubo, an official with Tanaka Kikinzoku Kogyo K.K., Japan’s largest gold and platinum retailer, said the Finance Ministry made three serious mistakes:

First, the 11 million they minted were far too many, making it impossible to keep track of the issue and giving counterfeiters a vast pool of genuine coins in which to float their imitations. Second, Kubo agrees with Abe that the huge difference between the coin’s face value and gold content was an “invitation to fraud.”

Finally, the coin’s transparent plastic seal was a fussy, unnecessary detail--apparently unprecedented--that made it extremely difficult to inspect for microscopic flaws. The forgeries had tiny streaks, invisible to the naked eye.

A fourth error might be characterized as bureaucratic hubris--the assumption that no one would dare counterfeit the Showa coin, with its austere imperial chrysanthemum on the obverse and pair of pheasants on the reverse.

Now, officials are preparing to mint yet another imperial coin, this one commemorating the formal accession to the Chrysanthemum Throne in November by Emperor Akihito. (Emperor Showa, known during his lifetime as Hirohito, died at the beginning of 1989 after reigning 62 years).

Once again, the coin will weigh in at 0.7 ounces and bear a face value of 100,000 yen. But Ujikane said officials intend to strike fewer coins--only 3.5 million--to maintain tighter control over distribution. They have not decided yet whether to seal it in plastic this time.

Chances are, the government will have little trouble selling the new Akihito coins. People formed long lines at banks to buy the Showa coins in 1986. Since then, Japan’s gold rush has accelerated into a kind of mania that transcends mere speculation. Conspicuous consumers not only wear gold in quantity but also have acquired a taste for eating it.

Demand for gold jewelry rose 20% last year to 130 tons, or more than one gram of gold for every man, woman and child in Japan, noted John M. Casey, a gold analyst in Tokyo for the French-owned brokerage W. I. Carr. He spotted gold-plated chocolate bars on confectionery shelves before Valentine’s Day.

“My feeling is that the Japanese now have so much money it’s inevitable they’ll keep picking up gold,” Casey said. “But some of the things they’re buying are insane--solid-gold golf putters and gold-infused ramen (noodles). Gold is a liquidity sponge, far beyond the point of being a rational investment hedge.”

Japan regained its title as the world’s largest importer of gold last year, again buying more than Taiwan to take in nearly 300 tons of it. That sum included about 13 tons of bullion coins, such as the Canadian Maple Leaf and the South African krugerrand. Unlike the Showa coin, the value of bullion coins fluctuates with the price of gold, making them unlikely targets for forgery.

Despite the boom in demand, Japanese gold retailers are worried that the Showa coin scam may hurt their industry. News reports suggest sales are down sharply at some bullion coin outlets.

“We’re afraid gold is going to get a bad reputation with all the publicity about the counterfeiting,” said Kubo of Tanaka Kikinzoku. “On the other hand, if we get our message across that gold is a safe investment, it could go the other way. This could turn out to be good p.r. (public relations).”

Already, there are indications that the prevailing speculative mania will soon wipe out any trace of shaky confidence in gold. Some rare coin collectors in Tokyo are reportedly offering 200,000 yen--double the face value and more than four times the gold value--for counterfeit Showa coins.