OSAKA -- A former managing director of Kobe Steel Ltd. admitted during his first court hearing Tuesday that the firm paid 30 million yen in cash to a "sokaiya" corporate extortionist in violation of the Commercial Code. Hiroshi Kajiwara, 58, acknowledged the facts outlined by prosecutors and said he deeply regretted his actions. Prosecutors claimed that during police questioning, Kajiwara said he felt it would be troublesome for regular stockholders if sokaiya shouted or lodged embarrassing questions during the firm's general shareholders' meetings. He added that he did not want the company's image to become tarnished. "(The defendant) asked sokaiya Kazuo Okuda to 'help out' during shareholders' meetings in 1983, after another heavyweight racketeer who had handled Kobe Steel affairs died," prosecutors said in a statement. According to the indictment, Kajiwara collaborated with Masahiro Fukazawa, former head of the company's general affairs division, and Yasuaki Takeda, deputy head of the division, in March 1997 to pay Okuda 20 million yen as a token of thanks for his cooperation "in handling" the shareholders' meeting scheduled for that June. In addition, Kajiwara gave Okuda an additional 10 million yen in December the same year as an indication that the firm desired that his services be terminated. Okuda admitted in court earlier this month that the points outlined in his indictment were correct. Fukazawa and Takeda go on trial next month, according to court officials. Sokaiya, who hold shares in companies' stocks, are a common fixture in the Japanese business world. They threaten to make public whatever embarrassing or damaging information they have discovered about the firms' activities unless they are paid off. The Commercial Code prohibits corporations from giving extra benefits to shareholders, including sokaiya. Those who provide or receive benefits in violation of the law can be imprisoned for up to three years or fined up to 3 million yen. According to prosecutors, Kobe Steel paid nearly 400 million yen to Okuda between 1988 and 1997.The firm also allegedly gave some 160 million yen in bribes to Venezuelan government officials at the time of the country's presidential election in December 1998 in a bid to buy favors for the firm's projects there. The payoffs dealt a blow to Kobe Steel's image, because it was discovered that the illicit outlays had continued despite decisions by the nation's major companies to terminate such financial favors. Public outrage over sokaiya payoffs surged from the mid-1990s after it was discovered that various firms, including financial giants such as Dai-Ichi Kangyo Bank and Nomura Securities Co., violated the Commercial Code and provided such favors.
