
In post-war Japan, Makoto Iida and Juichi Toda came to be known as the founding fathers of the country’s security industry. In 1962, the long-time friends and business partners created Secom Co., the first Japanese firm to provide security services to private and commercial properties.

Within a few years, the company played a key role in protecting athletic facilities during the 1964 Summer Olympic Games, which took place in Tokyo. Secom also became an important asset to the nation’s nuclear industry, securing nuclear power plants in collaboration with utilities such as Fukushima’s facility-operator, Tokyo Electric Power Company.

Iida and his partner Toda, who died in 2014, built Secom into the nation’s largest private security firm by market share, making it a hallmark of Japanese business. Today, the firm employs more than 53,000 people across 21 countries.

But a trove of secret records details how their friendship extended beyond the management of the company and their occasional drinking sessions.

In the early 1990s, when Secom became the first officially sanctioned Japanese firm in China, Iida and Toda also created a complex system of Japanese private companies and offshore entities in tax havens such as the British Virgin Islands and Guernsey, in the English Channel, according to incorporation documents and private correspondence. The documents stated that the purpose of the shell firms was to distribute Secom stock holdings among Iida and Toda’s relatives ahead of their deaths.

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The records are part of a larger cache of files – more than 11 million in all – that was obtained by the German newspaper Süddeutsche Zeitung, and shared with the International Consortium of Investigative Journalists and other media partners.

The documents show the inner workings of Mossack Fonseca & Co., a Panama-based law firm that specializes in building corporate structures that can be used to conceal assets. The leaked documents include emails, client records, and corporate filings from 1977 to 2015. The files, known collectively as the Panama Papers, contain information about 214,488 offshore entities connected to people in more than 200 countries and territories, including Japan.

In 1992, Iida and Toda retained Mossack Fonseca’ services to register two front companies, Dartmoor Donors Limited and Exmoor Donors Limited, in the British Virgin Islands. These companies were connected to other entities previously registered in Guernsey and Japan by shareholding.


When the two Secom founders completed the registration of the BVI-based shell companies, Ajiro Tsunoda, the lawyer who managed the transactions as an intermediary between them and Mossack Fonseca, suggested delaying the transfer of shares, an internal memo shows.

“The market price of Secom shares [needs to] be less than 6,060 yen on the closing date in order to avoid the Japanese taxes,” he wrote.

They didn’t have to wait long. A couple of weeks later, on September 14, 1992, Tsunoda sent a fax marked “URGENT” with instructions to proceed. Secom’s shares had closed at 5,780 yen, he wrote. With that transaction, Iida and Toda’s shell companies became the de facto holders of about 12 million Secom shares that were valued at about 70 billion yen (about $550 million at the time).

Tsunoda declined to comment for this story, citing attorney-client privilege.

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A former National Tax Agency official told Kyodo News that the use of multiple firms in foreign tax havens was a challenge for the Japanese tax authorities hoping to probe into someone’s assets.

“In no way was this done to avoid taxes,” a Secom spokesperson said by email. “We disclosed the information to the tax authorities and paid taxes accordingly,” the spokesperson added, without specifying the content or the extent of the disclosure.

Mossack Fonseca did not respond to specific questions about the companies with ties to Secom’s founders, citing their legal obligation to maintain client confidentiality.

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“Our company does not advise clients on the structuring of corporate vehicles and the use they may make of same,“ Mossack Fonseca spokesman Carlos Sousa wrote in an email.

Incorporation records also show that one of the objects of Iida and Toda’s companies was to “make gifts and donations.” Two British charities, the Leukaemia Research Fund (now called Bloodwise) and the Royal National Institute for Blind People, became the beneficiaries of donations by some of Iida and Toda’s holdings based in Guernsey.

In exchange, the donors required secrecy. The charities were told “to ensure that [their] personnel shall keep secret and confidential and not at any time for any reason disclose” any information relating to the transaction, and that a donor should be alerted if a government authority make inquiries, the documents read.


Both the charities declined to comment on the relationship with the companies controlled by Iida and Toda .

According to Tasuku Honjo, a professor emeritus at Nagoya University of Economics, the Secom founders probably sought to use the offshore scheme to avoid or substantially reduce the inheritance and gift tax burden.

The company proceeded after consulting legal experts and tax authorities and trusts their opinion, a Secom spokesperson wrote via email. “It is our understanding that its legality was not in question.”

The two shell companies based in the British Virgin Islands were dissolved in 2013. Those in Guernsey were still active as late as January, records released separately by the registries of the two territories show.

Iida and the late Toda are only two among many corporate executives, politicians, athletes, and celebrities whose financial dealings were exposed in the global investigation unveiled in early April by the ICIJ and its media partners around the world. Establishing a company in an offshore tax haven is not illegal. However, according to the main findings of the investigation, such offshore corporate structures are favored by Ponzi schemers, drug kingpins, and tax evaders.

In South Africa, for instance, the investigation has also revealed that at least two convicted members of an asset management company that had schemed to loot millions from investment funds, including mineworkers’ death benefits pool, used the Panama-based law firm to create offshore companies.

In Indonesia, small investors claim a company incorporated by Mossack Fonseca in the British Virgin Islands was used to scam 3,500 people out of at least $150 million, according to the ICIJ report.

“These findings show how deeply ingrained harmful practices and criminality are in the offshore world.” Gabriel Zucman, an economist at the University of California at Berkeley, told the ICIJ.

In the statement, the Mossack Fonseca spokesperson said the firm “does not foster or promote illegal acts.”

The South African and Indonesian cases are not isolated. In Japan, at least two men allegedly associated with separate fraudulent schemes over the past decade were found to be shareholders of offshore companies registered by the Panamanian law firm, the leaked files show.

In 2007, after seeing her savings stolen by a convicted criminal with ties to organized crime, a housewife from Kanazawa sought to recover some of her lost money. Her name is not being disclosed for fear of retaliation.

When the woman met Toshiyuki Miyamoto, a 41-year-old native of Kobe and a self-proclaimed financial professional, and a couple of other businessmen, she believed she had found the solution to her problems, according to court records. The woman alleged that Miyamoto invited her and a dozen others to a local restaurant to tell them about a once-in-a-lifetime opportunity.


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“Why are offshore companies a way to make money?” read one of the pamphlets Miyamoto distributed at his promotional events in Osaka and Okayama. It was a rhetorical question that Miyamoto and his colleagues always answered by saying that if clients invested in a Philippine company called Furaren, they could double their money in a year, according to court records and interviews with attendees.

Miyamoto promised there won’t be absolutely any loss.

But after an initial return on the investment of a few hundred thousand yen, the Kanazawa woman couldn’t find either her money or Miyamoto. She sued Miyamoto and, in September 2010, an Osaka civil court judge found him liable for fraud. In response to the allegations, Miyamoto said the company was actually based in Panama and he worked as a consultant. The Kanazawa woman’s money was to be used to buy a trading software, which was never delivered because she had not completed the necessary paperwork, he said according to the court records.

Like the Kanazawa woman, dozens of people lost more than 340 million yen ($3 million) in Miyamoto’s schemes between 2006 and 2007, a review of several complaints shows.

Although it turned out that the Philippine company never existed, Miyamoto did tell a half-truth about his ties to an offshore firm. The leaked documents reveal that in 2013, Miyamoto became the director and sole shareholder of Nelson World Trading Ltd, a Seychelles-based company previously registered by Mossack Fonseca. Its object was “to carry on business of an investment company,” according to incorporation records.

From 2010 to 2014 local courts have ordered Miyamoto to pay a total 36 million yen ($322,000) in damages but he hasn’t paid yet, according to the website of Katsumi Fujimori, the lawyer who represented some of his alleged victims in separate lawsuits.

Miyamoto could not be reached for comment.

The goal of incorporating a shell firm offshore may be to delay a police investigation, said Kito Masaki, a lawyer who specializes in consumer affairs.

“It doesn’t matter whether there is any actual transfer of funds to the company abroad,” he said. “It will take the police more than a year just to investigate and confirm the existence of the company.”

Mossack Fonseca did not respond to questions about the company controlled by Miyamoto. In an emailed statement, a spokesperson wrote that the firm does “not offer solutions whose purpose is to hide unlawful acts such as tax evasion”.

It is not clear whether Nelson World Trading Ltd. is still active but, among the leaked files, there are records and private emails with his intermediaries in Hong Kong that are dated January 2015.

The first findings of the international investigation dubbed the Panama Papers were published on April 3. Since then, Iceland’s Prime Minister Sigmundur David Gunnlaugsson resigned following revelations that he and his wife used a shell firm in the British Virgin Islands to manage inheritance. British Prime Minister David Cameron has come under fire after his admission that he benefited from an offshore trust created by his father. The exposé has also prompted authorities in France, India, Mexico, and other countries around the world to announce further investigations into the use of offshore companies in tax havens. This week the police raided the headquarters of Mossack Fonseca.

In Japan, during a press conference on April 6, Chief Cabinet Secretary Yoshihide Suga said the government has no intention to conduct an investigation on the matter.

The leaked documents reveal that at least 350 Japanese citizens or residents used Mossack Fonseca to register offshore companies in the past four decades. These included medical doctors who reached out to Mossack Fonseca representatives to protect their assets, as well as a number of merchants and managers of companies in a variety of industries.

In 2014 the National Tax Agency implemented a foreign assets statement system to secure taxation and collection of tax on the income earned abroad and inheritance of foreign assets. In that fiscal year, more than 15 billion yen ($139 million) in inherited overseas assets went unreported, according to data released by the NTA.

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In an effort to curb tax avoidance and enforce stringent regulation, the agency in 2015 announced that it will collaborate with members of the Organization for Economic Cooperation and Development and authorities in jurisdictions that offer low, or no, taxation rates.

The NTA also said it will start assembling data on overseas accounts by the end of 2018.

“When companies and individuals avoid taxes, the funds that are transferred overseas may be used to finance crimes, terrorism or as a source of illicit enrichment,” said Honjo, of Nagoya University of Economics,. “At the global level, the use of offshore companies has become a serious topic of discussion, but from this point of view, Japan is still behind.”

Scilla Alecci and Alessia Cerantola are part of the Japanese reporting team that collaborates with the International Consortium of Investigative Journalists, the Süddeutsche Zeitung and their media partners on the Panama Papers investigation. Both Alecci and Cerantola have covered Japan and Asia-Pacific affairs for almost a decade.