Kenichi Shinoda: The Japanese godfather

Kenichi Shinoda, the 70-year-old godfather of Japan’s biggest yakuza syndicate, is renowned for inscrutability. But he must have experienced a flicker of apprehension on news that US authorities are closing in on his operation. In a crack-down on international crime, the US Treasury has frozen his assets and those of his deputy. The move, reports Bloomberg, is “a slap in the face for the Japanese government for failing to rein in crime”.

Shinoda heads the 35,000-strong Yamaguchi-gumi group, which earns “billions of dollars” a year from crimes in Japan and abroad – “including drug and human trafficking, prostitution, money laundering and fraud”, claims the US Treasury. He is feared and admired, says The Daily Telegraph.

Masterminding “an aggressive expansion” of the 100-year-old organisation when he became its sixth kumicho (supreme godfather) seven years ago, Shinoda has been to prison for “killing a rival with a samurai sword” in the 1970s and for firearms offences.

Still, he is no ordinary thug. As leader, even behind bars, Shinoda was pivotal in moving the syndicate into the lucrative world of corporate finance (see below). As yakuza expert Jake Adelstein observes: “People think of the yakuza as wielding swords and having tattoos and missing fingers. What you should be thinking is…Goldman Sachs with guns.”

Shinoda began his career in 1962 in Nagoya, founding the Kodo-kai gang in 1984 and making it the Yamaguchi-gumi’s most successful branch. He became embroiled in numerous feuds – notably a war with the rival Dojin-kai gang in the 1980s, which saw him kidnapped and tortured. That established his credentials with the parent syndicate, and he was soon ensconced in its Kobe HQ.

When Shinoda took over as kumicho in 2005 – replacing the “art-collecting” Yoshinori Watanabe – he swiftly put his stamp on the job, says The Guardian. Insisting on taking a train, rather than a limo, to his induction ceremony, he cancelled the lavish banquet arranged in his honour for a nosh-up at a street noodle restaurant.

But his violence and determination to conquer Tokyo sparked fears of “a bloody turf war” and marked the end of the ties his predecessor fostered with police. Soon Shinoda was behind bars, having lost a Supreme Court appeal against a fire-arms conviction dating from 1997. But the mayor of Nagasaki’s murder in 2007 highlighted Yamaguchi-gumi’s new “hardline approach”.

When Shinoda was released last year, he was expected to keep a low profile, says The Japan Times. The American feds have noisily intervened – although it’s unclear whether much cash has been impounded, or if criminal charges will follow.

For Shinoda and associates, the action is “more of a sting than a blow”, concludes Adelstein. But it “won’t make them happy”.

The “semi-legitimate” standing of Japan’s mafia

Japan’s ambiguous relationship with its mafia gangs is a mystery to most Westerners, steeped in the Chicago tradition of all-out mob warfare. While some yakuza activities are illegal, the syndicates enjoy a “semi-legitimate standing in society”, says Justin Currie in The Guardian.

Operating openly out of a wealthy Kobe, the Yamaguchi-gumi gang has a reputation for being remarkably “civic-minded”, says Eric Johnston in The Japan Times. As one neighbour says: “Gang members sometimes clean up the rain gutters around my house, and I’ve seen them sprucing up the area around a local temple.”

When the Kobe earthquake struck in 1995, the yakuza were the first on the scene helping out. The same blurring of lines applies to business, where gang-leaders touting business cards mix freely with corporate executives, says Bloomberg. In recent years, the yakuza have increasingly turned to conventional businesses to supplement “more traditional income sources”.

Finance and Japan’s bloated construction industry are favoured sectors, but there are few industries the yakuza have not infiltrated – even if it’s just establishing “front companies” to hide illicit activities. Perhaps the chief surprise surrounding the financial scandal at photographic giant Olympus is that investigators have so far discovered no evidence of money being funnelled to criminal gangs.

Tapping international money-markets is new – a reaction to hard times. As Hiroko Tabuchi noted in The New York Times in 2010, mobsters have been hit by the recession as much as legitimate companies. Japanese authorities are campaigning to push them out of business. Organised crime faces an “ice age”, observes a former Yamaguchi-gumi legal adviser. “They looked for new earnings in the mainstream economy, but that’s triggered a backlash. Now some yakuza are worrying where their next meal will come from.”

MoneyWeek magazine

Latest issue:

Magazine cover
Going bust

What happens when countries default?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services companies in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.