Nippon Shinpan Co., mired in allegations that its executives paid off a racketeer to expedite proceedings at the firm’s general shareholders’ meetings, had failed to sever ties with a number of racketeers in the late 1980s, a former company executive said Monday.

The major Japanese consumer credit company had ties with about 20 “sokaiya” corporate extortionists around that time, prior to signing a “fictitious contract” with racketeer Kikuo Kondo, 60, to make him an “adviser” to the firm, the former executive told Kyodo News.

Kondo was arrested Saturday, along with eight officials of Nippon Shinpan, popularly known as Nicos. The company’s officials allegedly gave 28 million yen in cash to the racketeer in violation of the Commercial Code.

The firm “was careful about the amounts it paid to sokaiya so that it would not look unnatural in the account books,” said the executive, speaking on condition of anonymity. “Even so, quite a large sum had gone to sokaiya, although the amount did not reach 100 million yen annually.”

Around 1987, Nippon Shinpan, heeding external advice, went through the motions of cutting ties with all of the racketeers with whom it was associated, but then re-established relations with them after several months because they continued to harass and threaten company officials.

The company determined it would “not be a plus” to cut ties with racketeers after they repeatedly harassed company officials, using such intimidation methods as making threatening phone calls to them both at the office and at home, the former executive said.

Between 1990 and 1995, Nippon Shinpan managed to halve the number of sokaiya with which it had relationships. But it still was reportedly paying more than 10 million yen to them each year.

According to police, the company contracted Kondo as its adviser in January 1988 and paid him 3 million yen annually until 1991.

The amount started increasing in 1992, and from 1999 onward, Nippon Shinpan was paying him 800,000 yen per month in exchange for not causing trouble at general shareholders’ meetings.

The Metropolitan Police Department is looking into the alleged payoffs on suspicion that the company’s failure to sever ties with racketeers may have contributed to its deepening relations with Kondo.

Keidanren exit

Yoji Yamada, president of Nippon Shinpan Co., has resigned from the board of the Japan Business Federation (Nippon Keidanren) as a gesture of accepting responsibility for a racketeer-related scandal at his company.

Yamada, head of the leading Japanese consumer credit firm popularly known as Nicos, told Keidanren on Monday of his wish to resign, and the federation accepted his resignation the same day, the spokeswoman said.

Keidanren will watch how investigations into the scandal proceed, and will take measures against Nippon Shinpan in line with federation rules on corporate behavior that were revised last month, she said.

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