Japanese Authorities Raid Mitsubishi Electric, Toshiba

Police raided the giant electronics companies Mitsubishi Electric Corp. and Toshiba Corp. today as a scandal over paying hush money to gangsters widened to ensnare some of the blue-chip companies that created Japan Inc.

The raids were expected, as they followed the arrests Monday of Yoshiki Sugiura, 47, head of general affairs at Mitsubishi Electric, and Takeshi Watabe, 55, Toshiba’s head of general affairs.

General affairs sections at Japanese companies handle a grab bag of duties, ranging from public relations to paying off sokaiya, gangsters who blackmail companies.

In one of Japan’s worst-kept secrets, these gangsters brazenly attend annual shareholders meetings, intimidating the company or--when hired by executives--silencing unhappy shareholders.

This is the first probe of its size into the decades-old sokaiya racket, and it’s unclear how determined Japan and its companies are to clean up the racket.

Mitsubishi Motors Corp. named a new chairman and president after the company’s senior management last month said it would step down over allegations they approved payoffs to gangsters.

Managing Director Katsuhiko Kawasoe, 61, was named president, the company said. President Takemune Kimura, 66 will assume the largely ceremonial post of chairman. Current Chairman Hirokazu Nakamura, 71, will become an advisor to the company.

The investigation began in the less prestigious brokerage business.

Tokyo police broadened the probe last month to Japan’s revered manufacturing businesses.

Toshiba is the world’s third-largest microchip maker; it also makes consumer electronics and computers. Mitsubishi Electric is the world’s eighth-largest maker of microchips.