Organized
crime and the forest
— Can
the Japanese mob be linked to deforestation?
By LANCE
OLSEN
Over the past couple decades, the world's
financial press, major dailies, and newsmagazines have offered extensive
coverage of the rising clout of organized crime.
By August of 1993 for example, Daniel Bell,
writing for The New Republic, could write that a world once dominated by
conflict between capitalism and communism had been effectively supplanted
by one "divided between the corrupt and the clean." In May,
1988, New York Times columnist Thomas Friedman said the new split is
between the "free-market kleptocracies (Mafia regimes) and
free-market democracies." More recently, governments have issued
their own warnings.
In September 2000, the Associated press reviewed a
Crime Threat Assessment issued by the Clinton administration, a report
warning that organized crime cartels including Japan's notorious homegrown
version of the mafia — called yakuza — had by then become a
direct threat to the national security of the United States. The financial
capacity of crime organizations is a major reason for their rising clout
on the global stage.
Organized crime launders $1.5 trillion to $3
trillion a year through the world's economy, an amount far larger than the
national budgets of many nations. This is some of the world's dirtiest
money, gained in part from politicians' direct looting of public
treasuries, but also from the global trade in weapons, dangerous drugs,
and sexual slavery involving millions of women and children; the Far
Eastern Economic Review has reported that, in Japan, for example, the
sex industry's total earnings equal the nation's defense budget.
Over the past couple decades, governments have
responded by targeting the crimelords' bankers with laws putting a crimp
on laundering. Prominent names in banking have subsequently been
implicated in handling some the world's dirtiest money. But the world's
bankers are only part of the story.
A lengthy string of press reports over the past
several years suggest that much more attention needs to be directed toward
organized crime's suppliers, possibly including at least some of America's
own publicly traded timber companies.
For socially responsible investors, the upshot is
that there's more due diligence involved in choosing timber companies than
the sustainability of their operations. It also seems that at least some
responsibility for due diligence — and for disclosure to shareholder —
seems to rest squarely with the timber companies themselves. This need may
be nowhere so evident as in the case of timber companies supplying Japan's
construction industry.
In February, 1995, for example, a Reuters report
out of Tokyo said that organized crime has been involved in Japan's
construction industry for decades, and has its tentacles in some 900
construction-related firms.
In 1998, the South
China Morning Post repeated that estimate, and said that Japanese
police data on mob involvement in the nation's construction industry
showed that Japan's mobsters stood to make about $9 billion just in the
reconstruction needed after a major earthquake hit the port city of Kobe.
In October, 1993, Business
Week said we should pity the Japanese trade team, because "It
must be rough arguing that Japan's construction industry is clean."
Later that same month, the International
Herald Tribune reported "deep webs of corruption" between
Japan's politicians and its construction industry, going on to say that
ordinary Japanese people had long suspected that their nation's ambitious
construction boom was little more than a means of "turning
construction companies into lavish political contributors."
In March, 1994, the Wall
Street Journal reported that Japanese prosecutors had raided the home
of Kishiro Nakamura, a former construction minister, as part of their
investigation of an influence-peddling scandal. The Journal returned to
the story in November, saying that Japan's top five general contractors
had been "hit hard" by the political bribery scandal. The Far
Eastern Economic Review said that the surfacing of the scandal wasn't a
reflection of something new, and quoted a Japanese observer who alleged
that it had long been true of Japan's construction politics. Speaking more
broadly, a Japanese economist interviewed in 1994 by Sydney's The
Australian said the "The bigger the company is, the closer its links
are to the underworld."
It's been a story that just wouldn't go away. In
early 1999, Forbes
magazine published an article blaming Japan's gangsters for
"inefficiencies" in the construction industry. During the decade
of the nineties, according to a wide array of news reports, Japanese
politicians spent $1 trillion in pork-barrel construction projects, many
of them reportedly awarded to firms with mob links. When a Japanese
diplomat denied Forbes' mob ties to construction firms, Forbes deputy
editor Nigel Holloway said the magazine would stand by the contents of the
article, according to Kyodo
News Service.
The gangland-contaminated construction industry
has been no minor matter.
In 1993, initial reports of the emerging scandal
rocked the Japanese stock market, with the Wall Street Journal reporting
that "Tokyo equities fell broadly and sharply" as the
construction sector's problems unfolded.
In its 1998 report, the South China Morning Post
said anyone looking for the seat of Japan's economic crisis need look no
further than the construction industry. In May, 2001, Business Week
reported that "An astonishing one in six Japanese workers is employed
in construction." While no one has said that all construction firms
in the country are equally involved with crimelords, the story has just
been too big for any Japan-watcher to ignore.
The impact on forests of the world has also been
substantial. Japan's two-decade construction boom has taken down wild
forests on both sides of the Pacific Ocean, stretching from grizzly bear
habitat in Montana to sun bear habitat in Malaysia. In April, 2001, CNN
reported that Japan is the largest importer of timber in the international
market, and has been criticized as "a major factor in destruction of
the world's forests."
According
to CNN, Japan has just two percent of the world's population, but
consumes more than 33 percent of internationally traded wood products. Greenpeace
Japan forests campaigner Mikkio Fukuda told CNN that the Japanese
people have recently been "shocked" to learn that the timbers
their country uses "are destroying the ancient forests outside of
Japan."
America's timber
exports to Japan have been too hot to ignore in the United States.
Labor has pointed out that exporting raw, unprocessed logs to Japan
amounts to exporting the jobs that could be gained in processing the logs
at home.
Environmentalists have said that Japan's demands
on American forests have come simultaneously with record-level demands on
the home front, subjecting forest wildlife to pressures from near and far.
Former Worldwatch Institute staffer and Northwest
Environment Watch founder Alan Durning, for instance, has said that
logging roads now have access to more of the Pacific Northwest than its
salmon do. Over the past decade, logging has played a major role in
jeopardizing the region's salmon fishing industry.
But few controversies over U.S. exports to Japan
have caused more controversy than the illegal export of logs from our
National Forest system.
Despite the illegality of such exports, however,
Congress may have simply ignored them. In 1989, for example, when Forest
Service criminal investigator John McCormick was quoted in an Associated
Press story saying that Congress "controls the purse strings"
for the law enforcement budget. There were no full time investigators
assigned to the exports controversy, and McCormick said, "We still
don't have the blessings of the powers-that-be to go ahead with it."
He said that it was thus hard to know exactly how extensive the problem
was.
While exports from federal forest lands were
banned, there was little if any restraint on private landowners' exports,
and the late 1980s saw record levels of such exports as Japan paid
"at least three to four times" more than the American market,
according to sources cited by AP. In February, 1989, the Montana press
reported that one such landowner, Plum Creek Timber Co., was exporting
half its total cut, with the exports going "mostly to Japan." In
1992, for example, even two years after Japan's boom went bust, the Wall
Street Journal reported that the U.S. was Japan's top supplier of wood,
with $2.8 billion in exports. To get more, the logging corporations pushed
even deeper into the woods.
Throughout the 1990s, Wall Street's analysts were
saying that a sizable share of such companies' profits were coming from
their exports to Japan, and, in January, 2001, an executive of a major
Northwest timber firm, was a guest on Serious
Money, a Pacific Northwest talk show about investing. The exec told
the host that his company had done "quite well" selling its
goods to Japan, despite the sad state of that nation's economy.
In an era of growing concern over the rising power
of organized crime, it seems time to ask if American logging companies
should stop sending logs to Japan and certain other Asian nations where
mobsters seem to run the construction business. Because the world's
financial press and major dailies have been waving a red flag on this
matter for years, the necessary due diligence is far from onerous; in a
way, much of it has already been done for the investors who have merely
read the newspapers, and for companies obliged to know their customers.
In fact, according to a New York Times editorial
of November 6, 2000, eleven of the world's biggest banks have led the way,
in accepting "know your client" guidelines developed by the
non-profit anti-corruption group, Transparency
International.
With the world's potential laundry services
leading the way, it seems time to ask why the suppliers to mob-related
enterprises should not follow.
© Copyright 2001 by Lance Olsen , Project Director, Ambience
Project, Institute of the Rockies, 802 East Main, Missoula MT 59802
(406)549-1179 or LanceOlsen@juno.com
.
This discussion paper may be freely copied and distributed, provided that
no changes are made and that the copyright notice is left intact.
This page last updated 2008-06-16
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