JIN-255 -- Takefuji's Doomed Dancers

J@pan Inc Magazine Presents:

T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business, Technology and Cultural News

Issue No. 255
Friday, December 12, 2003

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@@ VIEWPOINT: Takefuji's Doomed Dancers

++ READERS RESPOND: "Mr. Winant is mistaken ..."
More readers weigh in on Japanese law


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@@ VIEWPOINT: Takefuji's Doomed Dancers

The recent arrest of Yasuo Takei, the former chairman of Japan's
leading consumer credit group and one of Japan's wealthiest men, has
opened a major can of worms. The details of the alleged telephone-tapping
scandal are bad enough -- as is the very strong probability that his
company, Takefuji, may cave-in as a result of losing its figurehead and

But much worse is what the affair has told everyone about the money-
lending business. Before, people just assumed it was corrupt.
Now they know it is.

Police raided 40 locations, including Takei's opulent Tokyo residence
and company headquarters in their search for evidence. He is being held
on suspicion of ordering staff to bug the telephone of a freelance
journalist who had compiled a series of highly critical articles about his
company. Three employees of a private detective agency allegedly hired
to do the tapping job were also arrested.

Word of the iconic chairman's arrest last week shook the market and at
one point sent shares in Takefuji, the hugely profitable company that
73-year old Takei founded in 1968 and rules with an iron fist, plunging
by its daily limit. Brokers began warning clients that if the chairman
is convicted, the event could lose the company its loan license and trigger
its collapse.

The sharp drop was a particular blow to Takefuji's many British and
US investors. Since the group's listing in 1996, most of them confidently
held onto their shares in what has until now been a lucrative bet on Japan's
surging consumer loan boom. Around a quarter of the 4.3 trillion yen of
loans currently held by Japanese individuals are non-collateralized and
originate from companies like Takefuji and its main rivals, Aifuru, Acom and

Stretching the limits of the law, interest rates of around 20 percent and
often heavy-handed debt collection methods by many loan companies have
turned the phrase "debtor's hell" into a Japanese buzzword.

Takei has denied the wire-tapping charges, and a company spokesman
described the sudden arrest as being like a "thunderbolt from a clear sky."
The company did decide, however, to suspend its notoriously steamy
TV advertising campaign, which for years has involved a scantily-clad
troupe called the "Takefuji Dancers."

The powerful Japan Business Federation, to which Takefuji was admitted
only last year, is now considering striking the company off its prestigious
membership list.

Takei is credited with many of the innovations that have made the consumer
loan industry in Japan so profitable. But he is also no stranger to criticism
and allegations of scandal. Even listed loan companies are regularly
accused of being too closely attached to the mob -- and of inappropriately
close relations with the police.

-- The Editors

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@@ READERS RESPOND: "Mr. Winant is mistaken ... "
More readers weigh-in on Japanese law

To The Editors:

Regarding Thomas T. Winant's letter on your Nick Baker feature story
(J@pan Inc, November 2003):

I was surprised to read Mr. Winant's views on criminal law, given that
he has taught comparative criminal law at a Japanese University. I
question which Western legal "standards" he is referencing when he states:

"Is Mr. Baker innocent? Not by many standards. Was he duped? It makes
no difference. The law does not differentiate between a violation intended
or one that is not intended. The 'penalty' may be mitigated by 'intent,'
but guilt or innocence is not affected."

It does, in fact, make a difference if a person has been 'duped' and/or
whether or not he had 'intent,' and it is of primary importance during
the adjudication phase, not the penalty phase.

In order for a person to commit a crime, he must have both "mens rea" and
"actus reus." Mens rea (from Latin, "mind of the thing") is the mental
state that, in combination with the actus reus ("act of the thing"),
produces criminal liability. According to Western jurisprudence, there
must be a concurrence of both actus reus and mens rea for a crime to have
been committed.

In other words, the individual must both have the intent and do the act
of committing the crime in order to be guilty of such crime.

And when Mr. Winant states:

"What was Baker's state of mind when he passed through customs with the
ill-fated bag? Was he drunk or hungover? ... None of that is germane to
a legal case, only to the penalty phase."

Again, Mr. Winant is mistaken. In order to be able to form the requisite
intent (have the mens rea) to commit the crime, a person must be in a
mental state in which he can actually form such intent. If he truly was
intoxicated, he may have been significantly impaired to the extent that
he did not possess the ability to form the requisite criminal intent at
the time of the act in question.

Now, as it is impossible to know what a defendant was actually thinking
at the time of his alleged criminal act, his intent is often inferred
from the circumstances. And whether or not, in this particular case,
it is reasonable to infer that Nick Baker did indeed have the intent to
commit the crime is a question of fact. To categorically say that
"it makes no difference" and that "none of that is germane" is simply
not true.

While it is true that Mr. Baker may have been convicted in a western
country based upon the same set of facts that was presented to the
Japanese court, it certainly would not have been based upon the same
rationale that Mr. Winant posits.

-- Bryan J. Koslow

**ORIGINAL STORY: "And Justice For All ... "


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Written and edited by Roland Kelts and
Leo Lewis (editors@japaninc.com)


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