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Thursday, 21 November, 2002, 10:51 GMT
Executive quits over gangster charges
Nippon Shinpan president Yoji Yamada bows as he apologises for his company's misdeeds
In accordance with custom, the buck stops with the boss
Japan's latest corporate scandal has claimed the scalp of the man at the top of the company in question, as consumer credit firm Nippon Shinpan owned up to paying off racketeers in exchange for a quiet life.

Speaking at a packed press conference on Thursday, Nippon Shinpan's president bowed deeply before telling reporters that he would resign as a result of the company's misdeeds.

"I keenly feel an unlimited responsibility for the scandal," 54-year-old Yoji Yamada told his audience, following a long-running Japanese corporate tradition of the man at the top taking the fall.

Eight senior executives at the company, Japan's top consumer credit provider, were arrested a week ago and charged with paying gangsters up to 80m yen ($650,000) since 1991 to stop them from disrupting shareholder meetings.

The racketeer accused of taking the payoffs, 60-year-old Kikuo Kondo of the Sumiyoshi-kai yakuza gang, was also arrested.

Anything for a quiet life

Nippon Shinpan is far from the only company accused - or found guilty - of giving in to the so-called "sokaiya".

The term simply means "shareholder meeting operator", and describes a brand of gangsterism unique to Japan.

Throughout the boom years of the 1980s and even the debt-ridden 1990s, Japan's army of yakuza - its home-grown mafia - realised that companies could be easy pickings.

They would buy token shares in public companies and then threaten to disrupt AGMs and other meetings with awkward questions unless they were paid off.

Alternatively they would offer their services to companies to scare off genuinely disgruntled shareholders.

Harsh consequences

In his profuse apology, Mr Yamada denied knowing anything about the affair.

His replacement will be chosen after negotiations with the company's lead lender UFJ Holdings - the bank seen as most at risk of collapse and nationalisation as a result of its huge bad debt burden.

The payments have been illegal since 1997, although the practice continues.

For Nippon Shinpan the consequences have already been stark, and its shares have lost almost half their value in 2002 despite assurances that it should double net profits to 8bn yen this year.

News of the resignation, however, pushed its share price 6% higher to 93 yen by the close of business on Thursday.


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