HPDBC Chapter 229 Letting the Wolf In
Chapter 229 Letting the Wolf In
February 28, 1990.
Nikkei Average: 30,120 points
In late February, Tokyo was completely enveloped by a continuous, cold winter rain.
In the Minato Ward, there is a secluded, high-end members-only tea room called "Shototei".
Raindrops pounded heavily on the cobblestone pavement, splashing up a thin layer of white mist. Several black luxury cars were parked quietly in the shadows of a back alley. Their engines were off, and rainwater trickled down their waxed bodies.
The air inside the tea room was dry and slightly warm. In the brass stove in the corner, several pieces of top-grade binchotan charcoal were burning silently, dark red sparks flickering faintly at the edges of the ash, emitting a very faint woody aroma.
Osawa Ichiro sat upright on the thick rush tatami mat.
Today he was wearing a very well-tailored dark suit with subtle patterns, and his Windsor knot was tied perfectly. Before entering the private room, he had spent several minutes in front of the mirror in the restroom, repeatedly wiping his face with cold water and forcibly suppressing the bloodshot eyes caused by extreme sleep deprivation.
Osawa stood ramrod straight, his hands clasped on his knees. On the surface, he still appeared to be the political "kingmaker" who wielded immense influence in Nagata-cho and single-handedly orchestrated the cabinet reshuffle.
But beneath his seemingly steady breathing, his heart rate remained at an extremely high level.
Since the outbreak of that unprecedented cash crunch, he had endured some of the most agonizing days of his political career. The Saionji family, operating behind the scenes, was indiscriminately draining the nation's liquidity from its very foundations. The industrial tycoons who sustained his political faction, relying entirely on highly leveraged bridge loans, were the first to suffocate in this man-made drought. The ever-increasing number of SOS calls served as a constant reminder of the impending collapse.
He was acutely aware that if no higher-level power could intervene to forcefully break the deadlock, the power edifice he had painstakingly built in Congress would collapse completely in the coming weeks.
He used a great deal of political resources and went through many twists and turns to finally bring about today's private meeting with the US ambassador.
Most importantly, this meeting was extremely secretive, and even the Saionji family probably wouldn't know about it.
"Splash!"
The camphor wood door was silently pushed open from the outside by the waiter.
A gentle breeze carrying the scent of damp, cold rain from outside wafted into the room, causing the charcoal fire in the stove to flicker intermittently.
William, the economic minister at the U.S. Embassy in Japan, stepped into the tea room.
This high-ranking diplomat, representing the interests of both Washington and Wall Street, was tall and wore a slightly loose, dark blue American-style wool coat. A few raindrops clung to his blond hair, and his grey-blue eyes quickly scanned the room's furnishings the moment he entered, finally settling on Ichiro Osawa's face.
"Member Osawa. Sorry to keep you waiting."
William took off his coat and handed it to the attendant behind him. He greeted the attendant in fluent Japanese with a slight accent. He had already changed his shoes outside the door, and wearing white socks, he casually walked to the guest seat opposite Osawa and sat down cross-legged.
"It is my honor that Minister William has taken time out of his busy schedule to come on this stormy day."
Ichiro Osawa gave a slight bow. A politician's smile, both approachable and maintaining a proper distance, immediately appeared on his face.
The waiter approached silently and placed two cups of freshly brewed Shizuoka premium Gyokuro tea on a low rosewood table. The emerald green tea shimmered with a warm luster in the bone china cups. Then, the waiter took two steps back, left the room, and tightly closed the shoji door behind him.
The tea room has excellent soundproofing, making the sound of rain outside seem distant and muffled.
William picked up his teacup, gently blew on the rising steam, and took a small sip.
"This tea has a very rich and mellow flavor."
William put down his teacup and looked directly at Osawa.
"Representative Osawa has been making waves in Congress lately. We've been closely following his proposals on political reform in Washington. Your decision to schedule this private meeting at such a busy time suggests that there are extremely important issues to discuss."
Osawa Ichiro held the teacup in both hands, feeling the warmth emanating from the porcelain.
He gently placed the cup back on the coaster, leaning forward slightly.
"Mr. William, regarding the recent progress of the Japan-U.S. Structural Insurmountable Barriers (SII) agreement, I personally believe that the current bilateral negotiations seem to have reached a stalemate."
Osawa's voice was deep and magnetic.
"Washington has been demanding that Japan open its domestic market and eliminate hidden trade barriers. But the old-school bureaucrats in Kasumigaseki and the rigid old zaibatsu in the Keidanren have been using all sorts of excuses to delay."
He looked directly into William's eyes.
"Japan's zaibatsu system and the complex cross-shareholdings among companies are indeed like an impenetrable wall, keeping excellent American capital and goods out. As a reformist within the Liberal Democratic Party, I have been thinking about how to break down this wall for free trade between the two countries from a legislative perspective."
William's eyebrows rose slightly. A barely perceptible scrutiny flashed deep within his grey-blue eyes.
"Congressman Osawa's vision is admirable." William said calmly, his hands clasped over his stomach. "Breaking down trade barriers is indeed in the long-term interests of both countries. Specifically, where do you intend to begin?"
Osawa Ichiro extended his index finger and tapped it lightly twice on the rosewood table.
"Large Store Law".
"This law is ostensibly designed to protect local small retailers, but in reality, it's a weapon used by domestic distribution giants to block large foreign supermarket chains from entering the Japanese market. If Washington is willing to give me some 'support' on certain diplomatic and exchange rate policies, I can forcefully push through the repeal of the relevant restrictive clauses of the Large Retailer Law in Congress next month, in the name of the Cabinet."
Daze has revealed his core asset.
"Furthermore, I will lead the drafting of antitrust amendments to restrict cross-shareholdings between companies. This will fundamentally dismantle the old zaibatsu's blockade of the market, allowing Wall Street capital to freely enter every business sector in Tokyo."
The air in the tea room became momentarily heavy.
William picked up his teacup and took a slow, deliberate sip.
"Washington naturally welcomes Congressman Osawa's determination to reform."
William put down his teacup, a polite smile curving his lips.
"However, our views on the issue of market closure in Japan have recently undergone a slight change."
He paused deliberately, observing the subtle reactions of Osawa's facial muscles.
"As far as I know, your country's Saionji Group, or rather the Saionji intelligence system, has placed hardware procurement orders worth hundreds of millions of dollars with technology companies in Silicon Valley, USA, over the past six months."
William's tone revealed a clear hint of admiration.
"His Excellency Ambassador Mansfield highly praised Mr. Shuichi Saionji's openness. They not only purchased large quantities of Cisco routers and IBM mainframes, but also actively promoted the application of US standards in Japanese communication networks."
"The Saionji family is a model of free trade. With such an internationally-minded company, Washington seems to lack sufficient reason to excessively interfere with Japan's normal 'self-regulation of the financial market'."
Osawa's eyelid twitched very slightly.
Now, why aren't you mentioning Saionji Ieya's purchase of your technology?
He slowly lowered his clasped hands. He leaned forward, and the smile on his face faded.
"Minister William".
Osawa looked directly at the other person, his voice very low.
"The Saionji family is indeed a shrewd comprador. They successfully bought the embassy's friendship with a procurement list worth hundreds of millions of dollars."
"But businessmen will always only serve profit. While they open their own doors, they are also building an even more terrifying fortress."
"Although the Saionji family is currently buying American goods, they are using their enormous financial advantage to establish an absolute monopoly in domestic retail, logistics, and even the underlying communication networks."
Osawa's breathing became heavy. He laid his hands flat on the table.
"Imagine this, Mr. William. Once this behemoth completely devours Japan's underlying retail and financial networks, forming a perfectly closed ecosystem, they will control the flow of data and pricing power throughout Japan."
"Do you think they'll still be beholden to Washington by then?"
William's eye muscles twitched slightly. His fingers, holding the teacup, paused in mid-air for half a second.
"You have two deals in front of you."
Ichiro Osawa held up two fingers.
"One of those deals was a hardware procurement order worth several hundred million dollars that the Saionji family gave to Silicon Valley to cover their tracks. They used your technology to arm themselves and then swallow up their domestic competitors."
"Another move was that, as the de facto leader within the ruling party, I used legislation to completely open Japan's entire 70 trillion yen retail and financial market to Wall Street. This included repealing the Large Stores Law and dismantling cross-shareholdings."
Osawa's gaze was fixed on William's face as if it were a physical object.
"What the United States needs is a completely compliant Japanese market, one that is fully open to Wall Street. Does a Japanese zaibatsu that is too large, attempting to establish its own rules and monopolize core resources, serve America's national security interests?"
Outside the teahouse, raindrops pounded against the wooden window frame, making a continuous "patter, patter" sound.
William listened quietly to Osawa's analysis.
Last fall, SEC senior investigator Arthur Vance suffered a major setback while tracking Saionji's overseas investments.
At the time, the opposing party used one hundred offshore shell funds registered in the Cayman Islands and Luxembourg to secretly accumulate shares in US extreme ultraviolet light source laboratories and precision multi-axis machine tool companies, breaking down large sums into smaller ones. When Arthur Vance noticed the anomaly and attempted to use the National Security Review Board's privileges to apply for an emergency freeze order, the opposing party exploited a blind spot in the disclosure rules of securities law and completed the exercise of proxy voting rights in a very short time.
The United States' most advanced semiconductor hardware patents and core physical prototypes were thus forcibly seized and transferred out of the country by Japanese capital through a series of regulatory loopholes and loopholes in administrative procedures. This was undoubtedly a slap in the face to Washington.
The US government has been struggling to find a legitimate political pretext to hold accountable this technology plunder that seriously violated the Coordinating Committee for Multilateral Export Controls (COCOM) red lines.
Now, Ichiro Osawa has taken the initiative to approach them. This powerful politician in Japan, in order to secure his own political survival, is willing to offer his political endorsement and request that the United States investigate the Saionji family.
This is tantamount to Japan handing Washington a sufficiently strong "political crowbar" from within. With this crowbar, the SEC can legitimately bypass cumbersome legal barriers and, under the guise of "assisting allies in investigating monopoly capital," reopen its hunt for the Saionji family's offshore funds.
"Mr. Osawa's profound understanding of fair competition in the free market is truly admirable."
William adjusted his posture. His smile became more smug.
"Washington has always been highly concerned about any 'monopolistic practices' that could hinder fair competition in a free market. A healthy market should not be held hostage by a tiny number of large capital entities."
He looked into Daze's expectant eyes and then changed the subject.
"The U.S. Securities and Exchange Commission has always maintained a strong interest in the flow of funds and tax operations of certain cross-border capital in offshore islands. If it involves actions that use improper financial advantages to disrupt market balance, Washington certainly has the technical and legal means to intervene and investigate."
Osawa Ichiro's breathing tightened slightly.
"However, Mr. Osawa."
William spread his hands, making a slightly helpless gesture.
"The intervention of administrative agencies always requires a rigorous evaluation process. Before Washington seriously assesses these 'potential monopoly risks,' we need to see substantial progress in your country's efforts to open up markets."
William's gaze was intense as he laid out clear preconditions.
"We are more eager to see your initial draft proposals on abolishing trade barriers and amending the Large Retailer Law in the congressional debate next week. After all, only when the bills enter the substantive deliberation stage can Washington explain to Capitol Hill the rationale for our intervention to 'assist' Japan in stabilizing its markets."
Osawa Ichiro's fingers tightened suddenly on the side of the teacup.
He had to shoulder this heavy burden and charge into battle in a desperate situation where he had no external financial assistance and his own political base was on the verge of collapse.
Osawa Ichiro slowly put down his teacup.
This was an insult to him, but he had no choice.
He picked up the pot of warm sake on the table and poured himself a full cup.
"I see."
Osawa's gaze turned extremely gloomy. He picked up the sake cup, tilted his head back, and forced the bitter-tasting liquid down his throat.
"At next week's plenary session of Parliament, the initial drafts on repealing the Large Stores Act and reforming cross-shareholding will appear on the agenda for debate as scheduled."
He placed the empty wine glass heavily on the rosewood table.
"Hopefully, Washington's 'assessment' will proceed as scheduled."
William smiled and raised his teacup, gesturing to Osawa.
"The United States has always kept its promises, Mr. Osawa."
Ten minutes later.
Osawa Ichiro put on the dark trench coat and left "Shototei".
The winter rain outside continued to fall, pattering dully against his umbrella. He got into the black sedan that had been waiting for him. The car started and quickly merged into the gray traffic of the port area, heading towards Nagata-cho.
……
Inside a private room of the tea house.
William sat alone cross-legged on the tatami mat.
He picked up the cup of jade dew tea in front of him, which had long since stopped steaming. His gaze passed through the half-open camphor tree door and fell on the bluestone slabs in the courtyard, which gleamed from the rain.
His lips curled upwards.
He set his teacup aside and reached into the inside pocket of his dark blue wool coat, pulling out a rather large military-grade encrypted satellite phone.
The long antenna is pulled out. Fingers rapidly flick the hard rubber buttons.
"SEC Headquarters, Enforcement Division."
A slightly tired male voice came through the receiver.
"This is William. Transfer me to Senior Investigator Arthur Vance. Access is via encrypted private line."
Three seconds later, Arthur Vance's somewhat cold and hard voice came from the other end of the phone.
"Minister William, it's late at night in Washington. If you're using a satellite line at this hour, I hope it's good news that's worth getting out of bed for."
"This is definitely good news that will energize you, Arthur."
William shifted to a more relaxed sitting posture. His fingers tapped lightly on the surface of the rosewood table.
"You've finally gotten rid of that humiliation you got in the Southern District of New York federal court last year."
Arthur paused noticeably on the other end of the phone. His slightly drowsy breathing vanished instantly.
"SA Investment's overseas fund pool? And those patents?" Arthur's tone tightened. "We lack substantial, underlying legal evidence to prove they constitute a monopoly and illegally transfer assets. They blocked our access last time."
"I know."
William narrowed his eyes slightly.
"Just now, Ichiro Osawa, the de facto leader of Japan's ruling party, personally made a request to me. He promised to forcefully push for the abolition of domestic retail barriers and cross-shareholding restrictions in the Diet next week, in order to meet our demands in the SII negotiations."
"In exchange, he demanded that we use administrative means to thoroughly investigate the Saionji family's overseas funds, forcing the Saionji Group to loosen its control over funds in Japan."
William paused.
"Arthur, we've finally got a sturdy enough 'political crowbar'."
"The ruling politicians within Japan proactively provided political endorsement and administrative requests. This gave us the perfect diplomatic and national security justification to circumvent those cumbersome securities law disclosure rules."
"You can draft a new investigative order immediately. Go and smash that multi-billion dollar firewall hidden in the Cayman Islands. Seize those funds, principal and interest, that are trying to devour core American technologies and deposit them into federal accounts."
"And by the way, let that little girl from the Saionji family understand that things from the United States aren't so easy to take."
On the other end of the satellite phone, Arthur Vance let out a long breath. Even across the Pacific Ocean, his suppressed excitement and fighting spirit, which had been building up for months, could be clearly felt.
"Received. The investigation team will complete the drafting of the court documents before sunrise."
A blind voice rang out.
William pressed the hang-up button and quickly put the satellite phone back into his coat pocket.
He stood up, not glancing again at the cold, unfinished tea on the table, and strode towards the door.
"Splash!"
He pulled the half-closed camphor wood door open completely with one hand.
The icy winter rain, mixed with a strong, biting wind, instantly poured into the private room, completely extinguishing the few remaining embers of embers in the corner stove. A wisp of smoke was quickly dispersed by the wind.
As his leather shoes trod across the wooden corridor, William's tall figure disappeared into the shadows of the passageway.
In the courtyard, dense raindrops pounded furiously against the bluestone slabs. The splashing grayish-white mist swirled in the air, sweeping along the layers of black eaves towards the dark Tokyo skyline in the distance.