Sokaiya - Corporate Thugs.

Death over dishonour.

Hirakiri (or Seppuku) ,the act of committing suicide is a ceremonial event where a dishonoured samurai incapable to complete his task or failed to do so chooses to commit suicide by disembowelment. The Samurai kneeling takes out a tanto (a short sword) to cut his abdomen. This is said to restore the honour of a samurai. Such is the extent to which Japanese culture places great importance to honour of a person. One goes too unimaginable extend to protect the honour of their name and their family. Such cultural values are common to South-Asian countries. Benedict suggest that this might be because relationships in Japan are duty-based and  one's value is dependent on the how others perceive unlike the west the where morals are guilt driven where truth, justice and individual rights are the vital components of consciousness.

But, this is not about the Samurais, their fearless acts and their honour. This is about how the Japanese corporate world was blackmailed and exploited for more than a century.

Exploitive corporate laws.

When a common citizen decides to invest in a company he/she is said to have limited liabilities, which means that in the worst case scenario if the business fails and incurs debt the investor wouldn’t be responsible to pay off the debt and his or her loss would only be the initial amount he/she invested. This is necessary as the investor doesn’t get to make the decisions related to the business operations and therefore shouldn’t face the consequences of the mishap to such an extent , otherwise they might be exploited by the owners of the company who might fraudulently misuse the investor’s hard earned money. But in Japan there existed unlimited liability to the managers and investors which meant that in the worst case scenario they didn’t just lose their initial investment but where also responsible to pay off the debt the company might have incurred. This meant that they could easily go bankrupt as there was no protection for the shareholder and the investor.

 Therefore a fear always lingered in the minds of the investors as one small mistake could cost them their fortune. Add to this the importance of honour which meant any rumour, false or true ,made investors run away as everyone wanted to play safe. Today globally investors only have limited liability and could lose only the initial amount invested. One might ask why unlimited liability existed in Japanese corporations on the first place. This could be explained by the idea that this was an amalgamation of two different business philosophies , the western and the Japanese which resulted in something imperfect as two different , separately good things won’t necessarily add up to make a larger good thing. This was the result of the enforcing of American ideology after the WW2 defeat of Japan.

The Sokaiyas

The cultural trait of love for honour and the existence of exploitive corporate laws allowed the widespread growth of the infamous Sokaiyas. Well dressed, educated in law and economics from the top universities of Japan these were thugs in disguise. These weren’t some ordinary thugs, they were skilled managers, with mastery in finances and corporate laws. They were connected to the big names in the corporate world of Japan, they were the white-collar thugs.

Japanese managers were threatened by the sokaiyas that if ransom isn’t paid they will ask embarrassing questions in the annual shareholder meetings which will bring out the company’s flaws in front of the investors, scaring them off. And these weren’t some simple questions, these were well thought ones as the sokaiyas knew where to look and what to look at. A manager might be well prepared for the questions and in the rare case the business might be perfect too but the sokaiyas had other methods. If nothing genuine found sokaiyas would come up with false rumours and false accusations of such kind that can’t be proven wrong. They would spread the rumours publicly which scared the investors off. If not that they would create havoc in the meetings not letting it conduct peacefully. Any manager brave enough to handle all that would simply would be given death threats and in some cases Sokaiyas did walk the talk, one famous example would be the murder of the vice president of Fujifilms who had stop paying bribes. Hence the managers didn’t really have a choice but to pay the ransoms and agree with what the sokaiyas demanded. From the investors perspective , he/she might understand that the rumours spread are mostly false and should make decisions rationally but the existing cultural scenario and general human psychology would tell you that in such scenarios rarely is rational thought used, it is the herd mentality that takes over.

Spread them out

One particular tactic the corporations used to handle the menace was to weaken the Sokaiya’s strength by spreading them thin. Corporations came together and smartly decided to conduct their annual shareholder meetings on a date agreed upon by all. What this meant is that the Sokaiya now couldn’t possibly attend all the meetings at once and even if they did attend few they would be in smaller numbers in each of them. Therefore reducing the possible damage. But this also meant that a genuine investor who might have invested in many companies couldn’t attend these meetings. In general the environment created by the Sokaiyas and the unlimited liabilities imposed on the public meant that the public was discouraged to invest in the public companies which in any capitalist economy is considered to be unhealthy.

Was it legal?

Technically speaking they were just asking questions in those meetings. As they did purchase the minimum required amount of shares they did have a right to ask those questions. In an attempt to reduce the impact of Sokaiyas the Japanese government fixed a higher minimum amount of the shares hold, this did reduce their activities but the powerful nevertheless could still have an influence by purchasing the minimum amount.

Their methods

Sokaiya either opted for the big cash for the threat of blackmail before the meetings or adopted clever strategies to get a steady amount of money by selling magazines. Sokaiya published these magazines which had the secrets and defaming content which could threaten the image of the corporations and as fee to shut up they sold these magazine subscriptions at absurdly high prices to these corporations.

After some push from the government policies and other threats the Sokaiya also used the method of disguising themselves as uyoku dantai (ultra-nationalist groups) which used special vans mounted with speakers and decorated with banners using the nationalist identity to target these companies to extort money.

Shaking hands

Helpless, many corporations started now using the services of the Sokaiya be it simple jobs to shut people who were threats or complex jobs to help the company get out of financial crisis by using their skills. For many resistance was futile and the only option was to shake hands.

So what began as a dire attempt to maintain honour and respect turned out to be an attempt in vain as the "Corporate Samurai" was no more an honourable man as he indulged in corruption and dishonourable acts.

The ceremonial suicide here might not be of the body but of the conscious as beautifully  put by Ota Dokan:

Had I not known that I was dead already I would have mourned my loss of life.