HOSTILE TAKEOVERS

The Coming Yakuza War

The biggest Yakuza group is celebrating its 100th year in operation, but it’s splitting into factions that may soon go after each other with bloody consequences.

08.28.15 5:13 AM ET

TOKYO — This year should have been a good one for Japan’s largest organized crime organization, the Yamaguchi-gumi, the one yakuza group that just about ruled them all. But as it marks its 100th year in business, internal squabbles may split the organization apart; it could also result in the kind of large-scale gang warfare that hasn’t been seen in decades.

The Japanese police are on full alert. Thursday (Japan time), the sprawling Yamaguchi-gumi headquarters in Kobe was besieged by a fleet of black Mercedes-Benzes and high-end Toyota Lexuses, transporting the top dogs of the Yamaguchi-gumi, dressed in their finest black suits, for emergency meetings.

The Yamaguchi-gumi is expected to splinter into factions with some gangs supporting current top boss Kenichi Shinoda aka Shinobu Tsukasa, 73, and others supporting a rival group, primarily based in western Japan, that opposes him and his parent faction, the Kodo-kai.

Japan’s organized crime groups, known collectively as the “yakuza,” i.e., “Losers,” or “Gokudo” (the ultimate path), are different from the mafias we know about in the West. They are treated as if they were some sort of controlled substance, dangerous but accepted within certain parameters.

So, in Japan, there are 21 designated organized crime groups that are regulated and policed by the Japanese government, and the yakuza themselves are not outlawed. Many yakuza pay taxes and declare their income. There are yakuza fan magazines; the upper echelon carry business cards. If you go to the webpage of the National Police Agency, you can find a listing of all the major yakuza groups, their headquarters, and their emblems (PDF).

The Inagawa-kai, Japan’s second-largest yakuza group, has its offices across from the Ritz-Carlton Tokyo. The Sumiyoshi-kai is located in opulent Ginza.

The groups are all structured as pseudo-families with lower members pledging allegiance to their surrogate father—the oyabun—and their “brothers.”

Of the yakuza groups, the Yamaguchi-gumi is the largest and most powerful. It had over 23,000 members and associates at the end of 2014, accounting for over 40 percent of those affiliated with gangs in Japan. However, even the Inagawa-kai, due to blood-brother relations between its leader and a senior member of the Yamaguchi-gumi, is essentially under the Yamaguchi-gumi umbrella, giving it a majority stake in the underworld.

The Yamaguchi-gumi isn’t only Japan’s largest organized crime group; it’s also a well-known Japanese corporation, founded in 1915 by former fisherman Harukichi Yamaguchi. It engages in a wide array of business activities, some of them legit and some not, and may treat competitors with, as the saying goes, extreme prejudice. Robert Feldman, an analyst at Morgan Stanley Japan Securities, once called it Japan’s second-largest private equity group and he was not incorrect. They are Goldman Sachs with guns—not to mention knives, bazooka launchers, sniper rifles, and assassins.

The group is divided into over 30 factions, some with over a thousand members, and some with fewer than a hundred.

It owns auditing firms, several hundred front operations, and network management and database companies. It controls Japan’s entertainment industry even now, and over the years its people have sneaked quietly into the backbone of several high-profile IT operations—only getting caught once in 2007, when a member of the Kodo-kai faction was revealed to have taken over the equivalent of Japan’s “classmates.com”—gaining access to the personal data of 3.2 million people. The group owns a chain of private detective agencies and keeps tabs on its enemies and their friends better than any intelligence agency in Japan.

The Yamaguchi-gumi has also had a hand in Japanese politics. The Minister of Education and Science has received donations and political support from Yamaguchi-gumi associates and front companies. Prime Minister Shinzo Abe was photographed with a consigliore of the group.

If there were a pamphlet to recruit young college graduates for the yakuza, it would read like this:

The Yamaguchi-gumi Corporation, with large comfortable headquarters in the international city of Kobe and lovely branch offices, complete with swimming pools and gyms in Nagoya and other major cities in Japan, has a proud history of over 100 years of serving the Japanese people. Our construction, real estate, IT, banking, and entertainment businesses are still thriving in a poor economy, and thanks to one of the best R & D sections in any Japanese company, we have a treasure trove of personal data on the elite in Japan’s business and political world that can be judiciously used for blackmailing such individuals and maintaining maximum leverage in the money markets. We not only offer lifetime employment* but we also offer a generous pension plan.

The asterisk would serve for the following disclaimer, which is important:

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*A lifetime in the Yamaguchi-gumi does not preclude the possibility of early death. A “lifetime” may also include time served in prison not necessarily for a crime that you actually committed but as a designated fall-guy. However, all members serving time in prison can be assured that we will maintain your family’s living standards until you return. Family may include wives, children, mistresses, and sometimes all of the above.

If you do survive until retirement, the pension plan is generous. In 2013, the final bonus and severance check was 50 million yen, according to a retired boss. That’s almost half a million dollars. The retirement policy was begun decades ago when the Yamaguchi-gumi split into two factions. The Yamaguchi-gumi HQ offered the pension plan as a means of wooing people back. It worked well.

They may have to offer a better pension plan now to quell the current rebellion.

The current leader of the organization, Shinobu Tsukasa, heralds from the Kodo-kai faction, which numbers between 2,000 and 4,000 members. He assumed power in 2005, taking over from Yoshinori Watanabe, who hailed from the Yamaken-gumi, which was once the most numerous and powerful faction.

Watanabe was affectionately known as “Goro-chan,” i.e. Mr. Gorilla, for his simian appearance. While many yakuza in Japan are naturalized Koreans or children of Japan’s former outcaste class, burakumin, and thus were subject to discrimination, the Yamaken-gumi tends to have more outcaste class members while the Kodo-kai has a larger Korean-Japanese makeup. That has helped create tension between the factions.

Why is the group splitting apart?

Police sources and individuals associated with the Yamaguchi-gumi say that the Yamaken-gumi faction first split from the group and convinced other factions to follow. The response of the ruling council of the Yamaguchi-gumi has been to sever ties with the Yamaken-gumi and their backers, including the Takumi-gumi, which may be a severe blow. The head of the Takumi-gumi, Tadashi Irie, is well respected in the underworld for his financial savvy and loyalty to his men.

There have long been other elements within the Yamaguchi-gumi unhappy with the reign of Shinobu Tsukasa. Yamaken-gumi members feel the sharing of power has been unfair and that the aggressive actions of the Kodo-kai towards the police resulted in provoking major crackdowns. Indeed in September 2009, the head of the National Police Agency declared war on the Yamaguchi-gumi Kodo-kai faction—not the Yamaguchi-gumi itself, just the Kodo-kai faction—vowing that “we will remove them from public society.”

In October 2011, ordinances which criminalized paying off the yakuza or working with them for mutual profit went into effect with a devastating impact on gang revenue and lifestyles. Some elements in the Yamaguchi-gumi expressed frustration with the puritanical rules of Shinobu Tsukasa, who returned the gang to its roots and forbade dealing in drugs and other moneymaking activities that seem attractive to those gang members who put quick profits before honor.

One middle-ranking member jokes, “You can’t make a dishonest living if you’re following the old rules.”

Other sources of gang discontent are increasingly odious restrictions on the use of gang business cards and the emblem. The Yamaguchi-gumi is a franchise; lower-ranking groups pay to belong and use the symbol under what amounts to a license. If the lower-ranking gangs can no longer use the symbol to strike fear into the hearts of ordinary citizens and extract cash from their wallets, they are reluctant to pay money up the food chain.

A rebellion within the Yamaguchi-gumi is not unprecedented—and the precedents are ugly.

The Yamaguchi-gumi has a history of splits and divisions. The most well known was the Ichiwa-kai rebellion in 1984, when almost half the organization seceded. The resulting conflict dragged on five years with gang warfare erupting all over Japan, and nearly 30 deaths. Bombs were thrown, trucks were driven into houses, and guns were fired in the streets.

(Guns being fired in the streets may seem trivial in to people in the U.S. but Japan has incredibly strict gun control laws. Last year in this nation of over 120 million people there were fewer than 10 gun-related homicides.)

In October 2008, once-powerful crime boss Tadamasa Goto was expelled from the Yamaguchi-gumi for insubordination, failure to attend meetings, and for making a deal with the FBI in which he traded organization secrets in exchange for a visa into the United States so that he could obtain a liver transplant at UCLA. Three of his yakuza associates were also able to obtain liver transplants at the hospital.

Goto responded to his expulsion by gathering supporters and made an attempted rebellion that resulted in several top bosses being dismissed. The conflict ended with no shots being fired and ironically sealed the Kodo-kai faction’s lock on power.

Authorities and underworld figures speculate that with the Yamaguchi-gumi split, Goto, who has exiled himself to Cambodia, may also seek a return to power. No one is sure that this time the conflict will be peaceably resolved.

As a police source in Hyogo Prefecture put it, “The last major split in the Yamaguchi-gumi resulted in five years of violent disruptive gang warfare. We are on full alert in case history repeats itself. It would seem likely that it will.”