By January 1965, the Kanto-kai had been dissolved.

  Ishii called Miyamoto and another trusted lieutenant to his home in Yokosuka. He greeted them dressed in traditional Japanese clothes, and told them what was painfully obvious. “The days when yakuza could make a living by gambling are over. It’s time to move on. The police only need a pair of dice and some testimony to put us in jail.”

  There was talk among the yakuza to consider limiting the games to only wealthy patrons of the yakuza. They thought that customers were ratting them out to the police, so perhaps carefully choosing the clientele would eliminate the problem.

  Ishii didn’t agree. The problem was that even a wealthy businessman might complain to his wife or girlfriend after a huge loss. She would then call the police. In some cases, the businessman himself might make the call out of spite.

  It didn’t matter how the gambling customers got caught — they would tell everything to the police: who came, where they sat, how much money they spent. The yakuza kept their mouths shut, but they couldn’t expect the same discretion from the rich businessmen, celebrities, and industrial magnates who participated in their gambling events.

  Ishii decided it was time for a new course of action. In 1967, with the aid of businessman Kenji Osano and funding from the Heiwa Sogo bank, Ishii set up his first real company, Tatsumi Sangyo, a construction firm. The Kanagawa government listed it as a designated firm for public works projects. Ishii was on his way to becoming a new type of yakuza — one that ran legitimate and profitable businesses. This made life much easier for his family, which included a beautiful wife and a young daughter. To the outside world, he now looked like a businessman, not a thug.

  The path that Ishii took was unusual, but he set a precedent within the Yokosuka-ikka. He chose a young Kyushu-born yakuza named Takahiko Inoue to be his bodyguard, and to follow Ishii’s example. That same Inoue would later mentor Saigo. Ishii had many revolutionary ideas for a yakuza boss, but his teaching was that every yakuza needed two streams of income: legitimate and non-legitimate. Of course, the legitimate job was usually boring — you could hire katagi to do that. It was the ill-gotten gains that were the most fun — at least Saigo thought so.

  Ishii’s time in jail had made him rethink how he wanted to live and survive as a yakuza. At his new company, Ishii made himself the CEO, Miyamoto the vice-president, and a smart businessman the executive director.

  The wealthy customers and politicians who had been guests at his gambling events created a solid network for securing public works and general construction projects.

  By 1969, the Inagawa-kai’s territory expanded to include Yokohama, Kawasaki, and finally parts of Tokyo. They set up offices in the Roppongi neighborhood of Minato-ku, one of the twenty-three wards, under the name of Ingawa Kogyo (Inagawa Enterprises).

  Of all Ishii’s business ventures, Tatsumi Sangyo was the only venture where he was listed as a director. He ruled the other ventures from the shadows.

  In 1986, Inagawa chose not his only son, Yuko, but Ishii, the mentor of his son and the head of the Inagawa-kai Yokosuka-ikka, to be his successor.

  Thousands of yakuza, including Saigo, attended the ceremony, held on May 5, 1986, at the Inagawa-kai main family headquarters in Atami, in the sixty-tatami-mat-sized hall. In addition to yakuza, the attendees included politicians, movie stars, celebrities, bankers, and some of the heads of Japan’s largest financial firms. Every major yakuza group sent their envoys: the Yamaguchi-gumi, the Sumiyoshi-kai, and even the Korean Japanese yakuza group Tosei-kai.

  The long driveway leading up to the house was lined with low-level yakuza standing silently in their black suits. They guarded the streets as the senior-ranking yakuza strode into the main hall, almost all dressed in hakama (formal Japanese men’s kimonos) with the crest of their yakuza group boldly embroidered on the clothing. It was a royal event, covered by every major newspaper in Japan.

  The ceremony was performed with the rare grandeur reserved for a succession ceremony. Each yakuza group has a slightly different variation of the ceremony. On that day, it was done in accordance with the bakuto tradition — the way of the gamblers. At the end of the great hall was a Shinto altar devoted to Amaterasu-ōmikami, the goddess of the sun. Holy sake, food from the mountains, rice cakes, and other offerings were laid before her. There was a white cloth stretched in front of the altar where the guests of honor sat.

  With their backs to the altar, Inagawa sat on the right, and Ishii on the left, as was customary for the successor.

  After the elaborate prefatory remarks, which included the greetings and inspection of the sake, Inagawa drank from the succession cup. He gave it to the master of ceremonies, who then handed it to Ishii, while saying, in almost archaic Japanese, “This cup of sake you are about to drink is of great significance. As you drink it dry, you will take upon yourself the heavy responsibilities and great duties of the second-generation leader of the Inagawa-kai. With those feelings in your heart, we beseech you to please drink deeply from the cup.”

  Ishii, who remained calm and seemed somewhat detached during the event, took the gold sake cup and drank the contents in three sips, as tradition demanded. As soon as he finished, a huge roar of applause rose from the crowd. Inagawa and Ishii both stood up and switched places. Banners were unfurled. The changing of the guard was complete.

  Saigo had no idea just how large the Inagawa-kai was until he witnessed the succession ceremony. He didn’t fully understand it, but the seriousness of it all impressed him.

  The Yokosuka-ikka was now a very good name to have with Ishii in power. The Inagawa-kai had close to 9,500 members, including associates. The Yokosuka-ikka had close to 2,000.

  Ishii made a big impression on Saigo. He didn’t look like a yakuza. He seemed aloof, like someone in the world, but not of it.

  Sometime during 1987, Saigo’s oyabun put Saigo on Ishii’s security detail, just for a day. Saigo was an up-and-coming yakuza, and had a reputation for toughness. For Saigo to be chosen to protect the legendary chairman, and to have even spoken to him directly and be acknowledged by him, was a rare honor.

  In an organization like the Inagawa-kai, it was a long way to the top.

  CHAPTER ELEVEN

  You’ve been naughty boys: the first anti-organized crime laws

  Even now, it’s hard to succinctly explain the power that the yakuza and people like Ishii had in postwar Japan. Japan’s award-winning film director Kitano Takeshi perhaps put it most eloquently: “Japan has two governments. One is the public government. The other is the one that issues orders to public institutions: the hidden government.”

  Kitano knows a great deal about the yakuza, as many in the entertainment industry do. It is one of the few industries left in Japan where the yakuza still have solid power.

  In his book, Kitano Par Kitano, Kitano discusses “the dark powers” of Japan. He laments that, in recent years, due to internal struggles in the Inagawa-kai, there are many members who no longer uphold the group’s code of ethics. Many of his films can be seen as a critique of the changing yakuza and, in particular, the Inagawa-kai. His films Outrage and Beyond Outrage are loosely based on the moral disintegration of the Inagawa-kai. The catch copy: “They’re all bad guys.”

  There is a reason the yakuza managed to be tolerated by Japanese society for so long. There used to be a code. It wasn’t much of a code, and it may have been perfunctory. Some yakuza never paid it heed, but many did. Everyone knew what it was. This was what Takahiko Inoue had tried to tell Saigo many years before.

  Many Japanese people feel that the only thing worse than organized crime is disorganized crime. Disorganized crime includes purse-snatching, robberies, break-ins, muggings, rape, and petty theft. The yakuza keep disorganized crime at bay. They give people a feeling of safety within the neighborhoods and entertainment districts they control.

  Saigo’s scroll of the yakuza code of ethics hung up on his office wall in Machida. The code was the standard for any Inagawa-kai Yokosuka-ikka member during his time in the organization. The code, written in Japanese cursive, set the conditions for what would get a member kicked out. The first was: no using or selling drugs. Saigo didn’t sell drugs. However, every now and then, he would weaken and go on a meth binge — but that was a rare occurrence.

  The other rules included no theft, robbery, indecent acts, or sexual crimes. There were other rules about relationships among yakuza, and there was a fairly recent addition to the code: do not have any unnecessary contact with the authorities.

  At every Yokosuka-ikka meeting, these rules were read out loud, and everyone understood. One thing that should be noted was that extortion and blackmail were not expressly forbidden. Their logic was that if you were being blackmailed by the yakuza, you had done something bad to deserve it. They were enforcing “social justice” by fining people for their misbehavior.

  However, public tolerance of their activities was wearing thin by the 1990s. The National Police Agency did a survey in 1990, finding that 40 percent of the 2,000 companies surveyed had faced shakedowns from organized crime, and nearly one-third of those said they had paid up. Amounts paid ranged from 100,000 yen to 100 million yen. Of the remaining 60 percent, who said they hadn’t been shaken down, many were probably lying.

  Yakuza were still considered legitimate. They operated in the open, with their corporate emblems on display. They wore badges, walked the streets in groups, and were afraid of nothing. The police couldn’t act against the yakuza unless the victimized companies complained, and it wasn’t a crime to pay off the yakuza. They were free to ask for “donations,” and the companies were free to give it to them. Many large corporations not only gladly paid the yakuza for their protection, but paid the yakuza to help them make money.

  Meanwhile, the wars between the yakuza groups were escalating at a pace that scared the general public. Yakuza activities became increasingly anti-social, and cozy ties between the ruling elite and the yakuza became nationwide scandals (sometimes even international scandals). Japan had reached a point where the yakuza problem was too big to ignore any longer.

  Ishii passed away in 1991 at the age of sixty-seven. He died from a massive brain tumor, leaving behind a mountain of bad loans and missing money. He was buried in Ikegami Honmonji, a Buddhist temple in Tokyo whose funeral plots are sometimes called the yakuza graveyards. Later, Machii, who had ruled the Tosei-kai, Japan’s Korean mafia, would also be buried there. Riki Dozan, postwar Japan’s most beloved pro-wrestler, and secretly Korean, who was killed by a Sumiyoshi-kai gangster, is there as well. And if you look closely, you can find the grave of a tekiya oyabun that has the name of Prime Minister Yasuhiro Nakasone engraved upon it. A walk among the tombstones there is like taking a stroll through yakuza history.

  The same year that Ishii died, the National Police Agency introduced the first laws to specifically target the yakuza. The new comprehensive anti-organized crime laws were titled “The Countermeasures Against Violent Groups,” and went into effect in 1992. They were heralded as the end of the yakuza, but for Saigo and his crew they were a blessing.

  Although created with all the best intentions in mind, the watered-down version that passed had some unexpected results, to say the least. The countermeasures against violent groups, contrary to their intended purposes, made extortion and related criminal activities much easier to carry out.

  There is a saying in Japanese, namabyoho wa kega no moto, which roughly translates as “a half-baked knowledge of the laws of martial arts is the cause of injury.” It proved to be true for the anti-organized crime laws as well. The way the new laws were set up was so lax that it made enforcement difficult and the likelihood of arrest for violations extremely unlikely.

  The laws were intended to immediately allow the police to crack down on yakuza activities, encourage members to leave, and force them out of the public eye. But the laws were a complicated mess, full of holes, and carried such light punishments that they seemed pointless. However, they did serve as a warning to Japan’s 88,000 yakuza that times were changing. And they gave the police a solid excuse to go in and out of the yakuza offices whenever they wanted, as well as to put a check on the visible presence of the gangs.

  The laws forbade many types of shinogi — extortion, collecting protection money, blackmail, debt-collecting, and all other such staples were technically banned. Under the new laws, whenever a yakuza committed any of these acts, the victim could go to the police. The police would issue a cease-and-desist order to the yakuza in question. If they continued to do it, the police would issue a “Do not do this again” preventive order, and if the yakuza also ignored that, he faced arrest and/or a fine — up to year in jail, or a fine of up to 50,000 yen, or both.

  However, it almost never went that far. Before the new laws came into effect, the police would build a case and make an arrest. But now they’d give the yakuza a warning first to cease and desist. It was like baseball rules for them — two strikes and you’re out. For most yakuza, the warning was enough. For some people, simply having the yakuza go away was more than enough. At least the police moved quickly.

  There was also a relatively unknown addition to the law: if you were an individual asking the yakuza to do any of the forbidden activities, and they kept doing them, you faced the same penalties.

  One thing the laws effectively did was force the yakuza to retreat further from the public eye. The use of their coat of arms was strictly forbidden.

  The law also attempted to force the Japanese people to recognize them by another name — not yakuza, gokudo, or ninkyaku, but as boryokudan (violent groups). The yakuza were incensed by the new moniker given to them. The Japanese have traditionally believed that words have a spirit residing in each of them called kotodama. If you change what people call something, you change what it is. The yakuza did not like being called boryokudan. The word had no dignity; no hint of grace or nobility, but simply described what most of the gangs were.

  Organized crime groups changed their names to have a more corporate sound. They took their signboards down from the outside their office buildings and brought them inside. For example, the Inagawa-kai Yagita-ikka Takada-gumi in the Saitama prefecture became Takada Enterprises. The gang boss was still listed on the company registry, but the front company functioned as the new face of the group.

  In his seminal 1992 book Yakuza Company, investigative journalist Takeshi Arimori argued that the new laws would push yakuza further into the corporate and business world as they took on the trappings of legitimate entities in order to comply with the law. He was correct.

  In May 1991, the Yamaguchi-gumi became a corporation registered under the name Sanki. It was officially created on March 28, 1991. March 28 is a highly auspicious day in the underworld — it is the birthday of Kazuo Takaoka, the third-generation leader of the Yamaguchi-gumi. The company was officially involved in renting office space and rooms, managing golf-practice courses, managing parking lots, and buying and selling antique arts and crafts. They were also involved in real estate sales, purchases, management, and rentals. You could argue that it wasn’t exactly an accurate picture of the Yamaguchi-gumi, but it listed the headquarters of the group as the office headquarters, and gave the group a new corporate face.

  Saigo was amused by the laws. It meant that his men didn’t get thrown in jail on extortion charges — they got warned first. This meant they could collect some money before the police shut down their operation, and the risk of his underlings actually having to do jail time was drastically reduced. The two-warning system meant that there was even more time to squeeze cash and protection money out of the usual customers.

  The police had essentially installed an early-warning system for the yakuza.

  The general public wasn’t very impressed with the system either. The police could only issue a cease-and-desist order if there was a complaint from the parties directly involved, the penalties were light, the yakuza themselves weren’t banned, and the entire yakuza franchise system, including the payment of association dues from the bottom to the top, had been left intact. The laws ensured that the economic impact on the yakuza was benign at best.

  The laws also required the police to officially recognize yakuza groups under certain criteria, such as the ratio of members with criminal convictions as “designated yakuza.” Each group was entitled to a public hearing before the police officially designated them as “violent groups.”

  At the first hearings, the reactions of the yakuza groups facing designation were indignant, for the most part.

  In 1992, at the public hearing held at the Tokyo Metropolitan Police headquarters, the chairman of the Sumishiyoshi-kai made a spirited defense of their existence:

  We, the Sumiyoshi-kai, in 1946, shortly after the end of the war, put our hearts and souls into the world of the yakuza. We have never felt like these so-called violent groups. We don’t believe we are such a thing. Frankly, we find it an unbearable nuisance to be called as such. However, while we cannot say these are good laws, we cannot disobey the laws made by those above us.

  The Yamaguchi-gumi insisted that they were a humanitarian organization and that to classify them as a violent group was a complete misunderstanding of the group and its goals.

  The Inagawa-kai had a surprisingly different reaction to the new laws. On April 10, Izumi Mori, the general affairs director of the Inagawa-kai, spoke on behalf of the group. Mori stated that Inagawa had told his organization that Japan passed this law because they had been bad. They needed to watch their behavior.

  “Indeed, we must reflect upon our past actions,” Mori said. “It does not matter what the laws are. They are laws laid down by the nation of Japan, and we will humbly and strictly accept them.”

  There is little doubt that Inagawa truly believed the axioms he spouted, that the yakuza were not supposed to cause harm to ordinary citizens.