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FTR #290 The Japanese Economy and the Kido Organization

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1. Just as the post-war German economy is inextricably linked with the remarkable and deadly Bormann organization, the Japanese economy is inextricably linked with the flight capital program set up by Koichi Kido, the principal assistant to Emperor Hirohito. The economic and political component of a Third Reich gone underground, the Bormann organization controls corporate Germany and much of the rest of the world. (It was created and run by Martin Bormann, the organizational genius who was the “the power behind the throne” in Nazi Germany.)

2. The Bormann group is a primary element of the analysis presented in the For the Record programs.

3. This program sets forth the facts concerning the Kido flight capital program, the continuity between the zaibatsu [4] (family trusts) of Imperial Japan and the Keirestsu (the contemporary Japanese corporate powers) and the truth of Hirohito’s central role in the Japanese war of aggression and the economic looting of Asia.

4. Much of the first side of the program consists of discussion and analysis of a very important article about “the M-fund,” a clandestine fund allegedly set up by the postwar Japanese economic interests and the CIA. (“Mischief or Conspiracy?” by Gillian Tett; Financial Times; 4/7-4/8/2001; p. 10.)

5. This alleged fund came to light as the result of the appearance of allegedly counterfeit Japanese government bonds. “It looks innocuous enough: a simply worded warming about “fictitious bonds” sits on Japan’s Ministry of Finance web site. In fact, it is a gateway into a world swirling with explosive accusations of fraud, conspiracy and political interference. . . . But that hasn’t stopped these mysterious ‘quasi-bonds’ from turning up in financial centers around the world. In total, their purported face value comes to trillions of yen. And their origin is the subject of mystery and controversy. Are these quasi-bond certificates part of a complex political conspiracy, or are they simply a ploy to trap foreign investors?” (Idem.)

6. A former Kennedy administration official is convinced the funds are real and has faced severe legal problems as a result. “One man convinced the certificates are real is Norbert Schlei, a senior U.S. lawyer and former adviser to President John F. Kennedy. In 1995, he was apprehended in Florida for handling these certificates and charged with securities fraud.” (Idem.)

7. “Schlei maintained that these certificates were valid, and that they were part of a complex scheme by the Japanese right and the CIA to recycle hidden capital from Japanese World War II loot. In his defense, he told the courts the certificates were legitimate and owned by a dozen of his Japanese clients. Then he dropped his bombshell by claiming Japan’s Ministry of finance had secretly issued the certificates in the 1980’s to conceal a hidden political slush fund. And this slush fund was linked to money that the CIA allegedly had used to fund rightwing political groups in Japan, as part of an anti-communist drive.” (Idem.)

8. Although Schlei’s account has been attacked, there is evidence that his account is correct. “But Schlei’s version of events is the one supported in a book, yet to be published, by Sterling and Peggy Seagrave, two U.S. authors who have written extensively on Asia. ‘When the American and Japanese public find out what has been going on all these years, particularly with regard to covert financial mischief, there will be a huge public outcry,’ they say. In fact, finance and politics in Japan are deeply murky and the complete truth may never emerge. But there are two main theories as to where the bonds came from.” (Idem.)

9. The Japanese MoF (Ministry of Finance) maintains that the bonds are fraudulent and are the work of the Japanese underworld. (In fact, the yakuza [5]—Japanese organized crime—is closely linked to the Japanese corporate establishment, as well as the fascist right wing.) The physical evidence is inconsistent with that hypothesis, however. “The official explanation, by the MoF, is that a gang of Japanese crooks printed them in the 1980’s. Some of the gang were convicted in Japan for fraud in the mid-1980s, given a suspended sentence, and have now disappeared. But the certificates were distributed to criminals overseas, who continued the fraud, say Japanese police. . . . It sounds credible—but contains odd details. No financial institution has ever admitted losing money as a result of these bonds. And the MoF did not declare the certificates counterfeit until 1993—a decade after they first appeared. It has also seemed reluctant to permit its bureaucrats to testify that the certificates were fake. At one trial in the U.S., a MoF witness disappeared early, and the tape recorder collecting his evidence broke. The ministry blames this on a ‘misunderstanding.’ Another oddity is the certificates’ design. Criminals usually make fake bonds identical to real bonds and in small denominations, to avoid attracting attention. The ‘quasi-bonds,’ however, do not even pretend to be a Japanese government bond, but an IOU—of a type not seen in Japan. Each certificate is dedicated to a specific Japanese person, and says it can be exchanged for 15-year bonds in the future, via the Bank of Japan ‘and Dai-Ichi Kangyo bank as an agent of the Bank.’ They claim to have been issued in 1982—or Showa 57 in the Japanese calendar (they are sometimes called ‘series-57 bonds’ by Americans. . . .But if that looks suspicious, the other explanation is far stranger and begins in the early 20th century, when Japan invaded its Asian neighbors and looted vast wealth.” (Idem.)

10. The “unofficial explanation” is rooted in the clandestine history of the Japanese economy during World War II and its aftermath. “After the Second World War, U.S. intelligence forces secretly seized this wealth and later used it to finance covert anti-Communist operations—paying bribes, for example, to rightwing members of Japan’s Liberal Democratic Party. Schlei told the Florida court that in the postwar U.S. ‘we came to feel that [such payments] were OK because the Russians were subsidizing the communists and socialists.’ In the 1960’s, the U.S. returned control of this fund—called the ‘M-fund’—to Japan. Japanese politicians, such as Kakuei Tanaka, a former finance minister and later prime minister, grabbed it, stole large sums and used it for their personal use and to buy political support with bribes. ‘For 25 years Tanaka was known as the money man of Japanese politics. My clients say the reason he had so much money was he got control of this M-fund,’ Schlei said. In the 1960’s, Tanaka tried to hide some of the fund by buying JGB’s and registering them in the name of his crones and supporters. But in 1976, he was sucked into a corruption scandal and convicted of receiving bribes from the U.S. Lockheed company. In the following years, his cronies wanted extra money and, in the late 1970s, the Tanaka clique decided secretly to print what have become the disputed certificates as part of a complex financial scheme.” (Idem.)

11. In addition to Tanaka, Yoshio Kodama was deeply involved with the Lockheed bribery scandal. Kodama had been interned by the Americans as a war criminal at the end of World War II. Like another Japanese fascist, Ryoichi Sasakawa, Kodama had been deeply involved with the Japanese patriotic and ultra-nationalist societies that brought fascism to Japan. Both Kodama and Sasakawa were deeply involved with Reverend Sun Myung Moon’s Unification Church.

12. In an attempt to redeem some of the capital invested in these bonds, the government of Paraguay approached some Wall Street bankers who, in turn, attempted to enlist the aid of former White House chief-of-staff (under Nixon) and Secretary of State (under Reagan) Alexander Haig. “Some former Wall Street bankers, who insist on remaining anonymous, say that in the early 1990’s they were hired by government officials in Paraguay, who had acquired some ‘bonds’ and wanted to offset them against Paraguay’s debt to Japan. They hired Alexander Haig, a former U.S. secretary of state, to find out whether Japan’s finance ministry would accept a deal. The Seagraves claim a deal was struck.” (Idem.)

13. Interestingly, and perhaps significantly, Haig is close to the Moon organization. The Nixon White House and the government of Paraguay were also close to the Bormann organization. “The German-South American group also had direct access to the Nixon White House through their representatives in Washington, and were proud of the fact that Bebe Rebozo was President Nixon’s closest friend. For, knowingly or unknowingly, Rebozo processed millions of their dollars through his Florida bank as part of normal commercial operations.” (Martin Bormann: Nazi in Exile; Paul Manning; Copyright 1981 [HC]; Lyle Stuart Inc.; ISBN 0-8184-0309-8; P. 275.)

14. The second half of the program deals directly with the Kido flight capital program. With Japan’s military defeat clearly on the horizon, Hirohito aid Koichi Kido undertook to secret the emperor’s fortune out of the grasp of the Allies. Speaking to the aforementioned Martin Bormann, I.G. Farben head Hermann Schmitz outlined the Japanese flight capital program. “Hermann Schmitz, had eleven I.G. Farben companies in Japan, as well as the intelligence organization of Max Ilgner’s N.W. 7. The I.G. Verbindungsmanner, who were the liaison officers between Farben in Japan and the home office in Germany, let him in on some of the fiscal secrets of Emperor Hirohito, who had used Swiss banks to place his enormous liquid fortunes beyond the reach of the Allies. So did the industrial and financial leaders of Japan, who also knew how to move their wealth around the world.” (Ibid.; pp. 120-121.)

15. It should be noted that the actions of Koichi Kido were influenced by those of Bormann. “With his immense land holdings and the profits from his many investments, Emperor Hirohito was by far the wealthiest individual in Japan. Within the structure was the lord keeper of the privy seal, the emperor’s most important advisor, the only one who could offer unsolicited comments. From 1940 to the end of the war the lord keeper of the privy seal was Marquis Koichi Kido, who performed just as ably for Hirohito as Martin Bormann did for Hitler. . . . And when Emperor Hirohito received his two requested reports on the future of the war in the Pacific from his army and navy chiefs of staff, he, too, concurred that their war cold not be won. He asked Kido to prepare a peace plan for the Japanese nation; and Kido began work on it in January 1944. The lord privy seal envisioned the first step in any peace plan as one that would preserve the imperial throne and its imperial wealth. Kido held meetings with key bankers and the transfers of imperial money to Swiss accounts was effected smoothly via bank telegraph credit, inasmuch as major Japanese banks had their own correspondent banking relationships with the important fiscal institutions of Switzerland. Emperor Hirohito and his imperial household zaibatsu had stock ownership and deposits in fourteen of the major Japanese banks, all of which cherished the honor of acting as an imperial depository. The fourteen banks gave all assistance necessary, of course, to the Kido transfer.” (Ibid.; pp. 121-122.)

16. The flight capital plan was more than successful, and the capital on hand for both the emperor and the Japanese corporations (zaibatsus) served as the foundation for postwar Japanese recovery and success. “By the end of the war, the deposits on hand were astronomical, and during the postwar rehabilitation of Japan, the imperial fortune kept increasing from the interest charges for loans to various zaibatsu companies who were struggling—as were German firms—for a comeback in world markets. As a result of these transfers American SCAP [Supreme Commander, Allied Powers] fiscal investigators found the imperial vaults pretty nearly bare when they went poking through the recorded assets in the imperial palace following Japanese surrender aboard the U.S.S. Missouri on September 2, 1945.” (Ibid.; p. 123.)

17. As was the case with Germany, the wealth that Kido funneled out of the country included the fortunes of the nations conquered and occupied by Japan. Those countries’ assets were looted and absorbed into the Japanese economy. “Like the Third Reich, the Japanese pattern of conquest and pillage prevailed. As armies marched, fought, and conquered, they were followed by the ubiquitous bankers and business specialists who assumed economic control of the lands and people and assets they coveted. They seized gold and formed companies to mine for minerals, oil, coal, and all other substances necessary to a resource-poor country like Japan. . . . But behind the slogans was a hard-headed commercialism dedicated to profits for the zaibatsus, which included the imperial household zaibatsu, funneled through stock ownership in the scores of corporations established in banking and industry of each conquered country.” (Ibid.; pp. 123-124.)

18. Both Kido and Hirohito exhibited considerable cynicism during the closing phase of the war. Recognizing that it was essential to deceive the Japanese people into prolonging the conflict, as well as deflecting blame for the defeat away from the emperor and the zaibatsus, both men engaged in a program of propaganda aimed at buying time for the flight capital program to be consummated. “In 1944, while the lord privy seal was making his peace plans, Emperor Hirohito waited for the ultimate excuse for withdrawal from the war. Kido had recommended the removal of Prime Minister Tojo from office in 1944. Tojo had originally been placed in office on the recommendation of Kido, but now he was to take the blame for the defeat and for the atrocities that Japanese forces had committed when it was foreseen that the war was lost. Actually, the war had been planned in the War Room of the Imperial Palace, from the attack and rape of Nanking to the bombing of Pearl Harbor, with the emperor an interested participant in all major strategic decisions. . . . Kido knew the people would have to be prepared for surrender. The fighting men had staked their honor on victory or suicide, and vast numbers had died in the emperor’s name. If peace were premature, many would say that Hirohito lacked the courage to fight the war through to the end. Widows and orphans would blame the emperor for causing their fathers and husbands to die in vain. The emperor and Kido knew that the people had reached the point where they were eager to see an end to war. When the time arrived that they thought it was they who had fought poorly and let the emperor down, then and only then, if Hirohito declared for peace, would the people feel obligated to him.” (Ibid.; pp. 124-125.)

19. Ultimately the plans of the emperor and Kido were successful. “While the emperor waited for an excuse for withdrawal from the war, he approved the many defensive measures being undertaken to repel the invaders. . . . His propaganda minister, like Dr. Goebbels in Berlin, fostered the notion of battle to the last, but it was smoke of sorts, contrived to make more steadfast the flagging will of the people. . . . On August 7, 1945, the emperor was presented with his reason to initiate peace. He received the Japanese army report of the atomic destruction of Hiroshima. Two days later, on August 9, a second A-bomb was dropped on Nagasaki. Although the emperor and Lord Privy Seal Kido had been thinking about surrender for nineteen months before the two atomic bombs fell, it took only days for Emperor Hirohito to agree to surrender terms on the Potsdam Declaration. At this point in time, as in Berlin, the preparations for post-war commercial survival for two defeated nations had been completed, and now only the final scenario had to be played out.” (Ibid.; pp. 126-127.)

20. As had been envisioned by the emperor, Kido and the corporate leadership of the zaibatsus, the flight capital program achieved its aim. “. . . once the occupation ended and Japan again became master of her own destiny, the family-controlled holding companies were to make their comeback bigger and stronger than ever before, under the name ‘Kerestsu,’ which also means ‘group.’ Today, the six big Kerestsus contol the economy; in fact they are the economy. The six largest groups control 40 percent of the nation’s corporate capital, and 30 percent of its corporate assets. The trading companies of these six Kerestsu hold stock in more than 5,400 companies in Japan, and the Keirestsu banks own even more. The Mitsubishi and Mitsui families were zaibatsu before their holding companies were broken up by MacArthur, but today they are comfortable Keirestsu. . . . As was proven in time, the wealth and the corporations controlled by the Bormann organization, on the one hand (in the Federal Republic of Germany, 1 percent of the corporate leadership controls 40 percent of the industry and finance), and by the zaibatsu/Keirestsu, along with the holdings of the imperial family, were the basic instruments that guided both defeated nations back to economic power.” (Ibid.; pp. 127-128.)