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Court's decision on yakuza boss a blow to underworld fundraising


A RECENT court decision should serve as the first step to break down the "bottom-to-top money payment system" that has been exploited by underworld groups as their financial sources.

The Fukuoka District Court has handed down an unsuspended prison sentence to the head of the Kudo-kai yakuza group, headquartered in Kitakyushu, for violation of the Income Tax Law. The court ruled that about 810 million yen (S$9.9 million) of the total money sucked in by Kudo-kai was hidden to avoid payment of about 320 million yen in income tax, an act determined by the court to be tax evasion.

The bottom-to-top money payment scheme is a money collection system peculiar to gang groups. The head of a gang group collects money taken in by its members in protection rackets against drinking and eating establishments and corporate entities and pays the collected money to a higher-ranking group. A huge amount of money thus collected eventually goes into the purse of the supreme leader of a yakuza group.

It can be said that the recent ruling has great significance in determining that the money collected under such a scheme is the income of the top leader of the gang group.

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The defendant side pleaded not guilty, claiming it was "money belonging to the organisation", but the court rejected this, saying that "some of the collected money was spent for private purposes". The Fukuoka Regional Taxation Bureau has imposed slightly more than 800 million yen in back taxes and impounded relevant bank accounts. Important evidence included records of money paid and received by relevant bank accounts and testimony from people involved.

The defendant side has filed an appeal.

The district court ruling was the result of co-operation among police, prosecutors and tax offices. This could become a model for how to block financial resources for yakuza organisations.

Underworld groups are not legal entities. A disadvantage of this fact is that the money collected under the bottom-to-top money payment scheme cannot be subjected to imposition of the corporate tax. As such money is paid in cash in many cases, its transactions tend to go unrecorded. From the viewpoint of ensuring fairness in tax burdens, gang group leaders should not be allowed to evade taxation.

With the recent ruling, there is concern that organised crime syndicates will make methods for securing their funds more sophisticated. The authorities should thus keep a close watch to check whether they are engaged in illegal money-making practices.

Kudo-kai, which has made repeated attacks on citizens and firms, is the only yakuza group identified as dangerous. The tax evasion case, in which two of the gang's leaders were arrested, was part of a crackdown by the Fukuoka prefectural police on the gang.

Police are called on to make all-out efforts to work towards stamping out Kudo-kai. It is important to ensure that not only Kudo-kai alone, but all yakuza groups are not able to collect protection money.

In a questionnaire conducted by the Osaka prefectural police last year, only 50 out of the 763 drinking and eating establishments surveyed responded, pointing to a deep-seated fear of yakuza groups among citizens.

Ordinances for eliminating organised crime groups, which ban payoffs to them, have been enforced throughout the nation. To make the ordinances workable, police must continue to serve as shields for the safety of citizens. WASHINGTON POST [REPRODUCED FROM AN EDITORIAL PUBLISHED IN THE YOMIURI SHIMBUN LAST SATURDAY.]

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