Japan Executives Tied to Mob Removed

A Japanese transport company alleged to have links to gangsters has removed its president and managing director, the firm’s new president said Friday.

“We learned about such affairs after reading the press. We were surprised and are currently investigating,” said Seisho Minatogawa, the new president of Tokyo Sagawakyubin Co. The dismissals marked the latest revelation in a chain of scandals linking brokerages and other companies to yakuza gangster syndicates that have damaged Japan’s financial reputation abroad and dented the Tokyo stock market.

The company has removed President Hiroyasu Watanabe and Managing Director Jun Saotome from their positions, said Minatogawa, recruited to the firm Thursday from a group company. Watanabe would remain as a director without executive authority and Saotome as a regular employee.

The Tokyo-based transport company was investigating the newspaper reports that it had close ties with Japan’s second-largest crime syndicate, Inagawa-kai, Minatogawa said.

“We apologize for the disgraceful affair,” Minatogawa said.

The Inagawa-kai crime syndicate lies at the heart of scandals at top Japanese brokerages.

Minatogawa acknowledged that the company paid $57.9 million for 200 memberships of the Iwama Country Club, a golf club run by Susumu Ishii, former head of Inagawa-kai. The memberships have little or no value since the golf club was later opened to the public.

Tokyo Sagawakyubin originally bought the golf club from Taiheiyo Club and later sold it to Ishii, newspaper reports said. Minatogawa made no comment on the deal.

Nomura Securities Co. and Nikko Securities Co. have admitted that their affiliate firms bought memberships in the golf club and that other affiliates lent funds to Inagawa-kai.

The presidents of both brokerages resigned on June 27 over the gangster links and improper compensation of favored clients’ investment losses.

On Wednesday, police in Tokyo and the western prefecture of Hyogo raided the Iwama Golf Club and several other sites linked with Inagawa-kai to try to trace the source of funds accumulated by Ishii.

Separately, government officials said Friday that they plan stricter rules to govern freewheeling securities firms in the wake of this nation’s major brokerage scandal.

“I think we will agree to make (loss compensation) illegal,” said Tetsuo Kondo, head of the governing Liberal Democratic Party’s Financial Affairs Policy Committee.

Kondo said Parliament probably would debate a revision to Japan’s Securities and Exchange Law when it reconvenes in August.

But officials will probably stop short of creating a more independent watchdog agency similar to the U.S. Securities and Exchange Commission.