TOKYO, December 25: Many Japanese firms have pledged to cut ties with corporate racketeers after police arrested executives at some of the country's biggest companies earlier this year for suspected payoffs to the gangsters.

But analysts say the vows -- mostly vague promises to avoid illegal activities -- mean little without concrete programmes to curb the payouts.

Corporate racketeers, known as "sokaiya," shake down companies by digging up dirt on executives or threatening to ask embarrassing questions at annual shareholder's meetings. The meetings are called "sokai".

"Just issuing a statement saying a company will cut ties with sokaiya doesn't mean much," said Hideaki Kubori, a Tokyo attorney who also serves as adviser to the newly established internal control committee at Nomura Securities, one of the first big brokerages to be nabbed in the growing payoff scandal. "Companies must demonstrate that they really mean it by introducing effective monitoring systems."The problem has grown so widespread that a dozen executives, including high-ranking officials at Dai-Ichi Kangyo Bank Ltd and Mitsubishi Motors Corp, have been arrested this year alone in connection with gangster-related payoffs.

The high-profile scandals, which captured headlines both in Japan and abroad, have prompted the recent wave of corporate pledges. With sokaiya payoffs now squarely in the public's eye, many companies feel they have take to demonstrate their resolve to stay clean.

Last week, the Tokyo Metropolitan Police said 2,200 Tokyo-based corporations had declared they would cut ties with the estimated 700 sokaiya operating in the city.

Promises alone, however, don't impress analysts like Kubori, who says more rigorous scrutiny of budgets would reveal whether companies are making good on their word.

Shigeru Nakajima, a Tokyo-based attorney who specialises in corporate crisis management, agrees. Without more open operations and management, Japanese companies are unlikely to regain the public's trust anytime soon.

"Disclosure of information, whether positive or negative, is the best weapon against this sort of scandals," Nakajima said.

Payoffs to sokaiya have been illegal since 1982, when Japan's commercial code was revised. However, lax disclosure rules and a variety of clever payoff practices make tracking the problem difficult, analysts said.

One favourite payoff practice is for targeted firms to take out subscriptions to sokaiya-related publications. Sold at exorbitant rates, the periodicals are often nothing more than a few scant pages with little content.

The payoffs continue -- although police statistics show companies report they have halted subscriptions of 13,000 sokaiya-related publications -- because companies want to avoid questions that challenge management at shareholders' meetings. However, with more international investors buying Japanese shares, pressure has mounted on companies to play by global rules.

"This is not a problem of ethics," says lawyer Nakajima. "It is a question of whether or not the companies are accountable enough to participate in the (international) game."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.