Dynam rejects claims of Japan underworld ties, money laundering
Pachinko operator newly listed in Hong Kong denies anonymous allegations that the Japanese company had links to organised crime and money laundering
A Japanese pachinko operator listed in Hong Kong has denied anonymous allegations that his company has ever been involved in organised crime and money laundering.
Dynam Japan Holdings chairman and chief executive Yoji Sato rejected claims that his company was involved in the crimes, but admitted it had been intimidated by criminal gangs in the past.
The Hong Kong stock exchange also denied it had lowered its standards in letting Dynam list on August 6 as the first Japanese initial public offering in the city.
An anonymous letter sent simultaneously to the exchange, the Securities and Futures Commission and the South China Morning Post alleged Dynam was involved with the Yamaguchi-gumi, a Japanese yakuza organised criminal group, as well as money laundering. "The Tokyo Stock Exchange and Osaka Stock Exchange both banned its listing. Why does the Hong Kong stock exchange adopt such low regulatory standards?" the anonymous report said.
Sato said the company had not applied for a listing in Osaka or Tokyo, but would be able to list in Japan if it met the criteria. He add that no pachinko operator was listed in Japan.
"We chose Hong Kong because Hong Kong is recognised internationally. Hong Kong is a more international market than Japan," he said.
"The Hong Kong stock exchange's standard is very high and strict. When we applied for an IPO, there was very rigorous due diligence. The IPO application in our case took six months. Normally it is two to four months."
A spokesman for the Hong Kong Exchanges and Clearing said its role was to ensure applicants adhered to strict listing standards and requirements.
"We have not lowered our standards in this regard," he said. "Generally, where an applicant had previously submitted an application to list on any other exchanges, it would include such information in its prospectus as it would usually be considered material information."
Dynam's Hong Kong IPO prospectus does not mention any attempt by the firm to list in Japan.
In Japan, 150 lawmakers from the ruling party and opposition parties are considering legislation that could legalise gambling within two years, according a Wall Street Journal report. Sato said if the Japanese casino bill was passed, Dynam would be a good partner for Macau gaming companies to open a casino in Japan.
"We are not in any concrete or serious discussions with Macau operators. We just exchanged business cards and had preliminary discussions in Macau," he said.
He conceded that when pachinko, which is similar to pinball, started in Japan 60 years ago, the business was "afflicted with antisocial forces".
"Several decades ago, there were also perceptions that organised crime affected casinos in Las Vegas and Macau," Sato said.
"We are totally against antisocial forces. We never gave a yen in bribes to the yakuza at all. We have no connection at all with antisocial forces."
However, he said that 20 years ago when Dynam opened some halls in Japan, it was approached by criminals who wanted to "partner" with the company.
"We declined and they sent trucks to crush and damage the halls, which delayed their opening," he said.
Between 10 and 20 years ago, there were roughly 10 other incidents of antisocial forces harassing Dynam's pachinko halls in various Japanese cities, including Fukuoka, said Sato, who has worked for Dynam since 1970.
"Antisocial forces broke the glass on our pachinko machines. They threw human faeces into our halls. Someone came to start a fire in one of our halls," he said.
"Then we called the police, and asked them to arrest the bad guys. A few people were arrested."
There had been no incidents for about a decade, Sato stressed.
"There is no money laundering in our facilities at all," he said.
"There is not much money laundering in Japan, as the controls in Japan are strict."
A high-roller pachinko machine would handle a maximum of HK$2,000 per hour, which was a small sum compared to casinos, Sato explained.
The SFC declined to comment.