When times are tough, Japanese gangsters turn to insider trading

KAZUHIRO NOGI/AFP/Getty

Japan’s gangsters, known as the yakuza, have been feeling the financial squeeze of late. During the 1980s, at the height of Japan’s publicly-financed construction boom, the yakuza cashed in on public works by demanding kickbacks from building contractors. In return, the gangster promised not to disrupt construction projects. For a while, business was good, and the yakuza were rolling high. But in 2003, the government had to cut back on public works spending—thereby reducing one of the yakuza’s most profitable sources of income.

Now, the Guardian reports, the yakuza are desperately trying to diversify their sources of funding by turning to legitimate private businesses to raise money. While still trying to earn kickbacks from the construction industry and getting a cut from illegal businesses including prostitution, drugs and gambling, the yukuza are now targeting the stock market. But that doesn’t mean they’re “going legit.” Police investigators say yakuza gangs are using the threat of violence to gather inside information before making investments.

Embattled police are appealing to businesses to help them in their fight against organized crime. A senior Osaka detective said, “We can’t deal with them alone—we need businesses to be on the lookout and help us expose firms that are nothing more than fronts for the yakuza.”

But this may not be so easy. According to Robert Whiting, a long-time Japan commentator, the yakuza is pervasive; few businesses in Japan don’t have connections to members. Plus, it’s not exactly clear that police and politicians are completely committed to destroying the networks. And considering the yakuza’s adeptness at adapting to new economic realities, it’s unlikely these gangsters will be giving up crime any time soon.