Opinion

・sokaiya,：an Alien Way of Doing Business

By CHRISTINE CUNANAN-NOMURA

The latest financial scandal in Japan concerns the alleged payment of hush money to professional racketeers by Nomura Securities Co., the country's largest brokerage, and by Dai-Ichi Kangyo Bank, a major financial institution. These two companies reportedly paid money and provided favors to corporate extortionists to prevent them from disrupting their respective annual shareholders' meetings.

Many foreigners were more scandalized by the very idea of "sokaiya" and their influence on companies than by the amount of the bribes or the kind of favors given. It's hard for us to imagine the institutionalization of sokaiya and the extent of their unofficial power over legitimate business.

A Kyodo News survey revealed that out of 50 major Japanese companies, 34 had been on the lookout or were still watching out for sokaiya.

Many firms conduct activities behind the scenes and some of these dealings concern things they would prefer not to disclose publicly. Some managers, on the other hand, fear that anything irregular at a public event ― such as a loudly voiced complaint, whether true or not ― will have a negative impact on them or their firm.

Sensitive Japanese companies with secret activities are easy targets for sokaiya, who threaten to somehow mar the company's good reputation or reveal information publicly. Some sokaiya coerce companies simply by threatening to shout and get angry at the shareholders' meeting, which otherwise lasts less than 30 minutes if the agenda proceeds smoothly.

Foreigners view this situation differently.

Corporate extortionists are found all over the world. However, few countries regularly worry about them on such a large scale.

In most developed countries, large companies that offer their shares for sale are required by law and by shareholders to maintain all activities open for public scrutiny.

Companies and managers in these countries are also more used to differing opinions, inquiries or criticism from shareholders, the media, unrelated observers and even their own employees. The latter parties all believe that they have the right to speak their minds because "it's a free world and I have every right to be heard."

The liberal atmosphere can be unpleasant, but most people realize they have no choice but to be confident about their decisions and thick-skinned regarding other people's opinions of them.

In fact, shareholders' meetings usually go on for hours because so many people have questions or comments about company performance. If everyone were so satisfied with a firm that they had nothing to ask or say and a meeting finished in 30 minutes, the management would be very surprised and happy indeed.

Shukan ST: July 11, 1997

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