'Gama- Gaeru': The Most Celebrated Ceramic Toad in Stock Market History

How "The Dark Lady of Osaka" Nui Onoue Hoaxed Japan's High Finance

This little post will neatly encapsulate the popular delusions and sheer madness of crowds brought forth by the Japanese stock market bubble of the late 1980’s.

The genesis of this story? The fourth floor of an awfully exclusive “Ryotei” restaurant in Osaka, which accommodated, prominently positioned, an ugly ceramic toad.

Within Osaka, the toad is known as “Gama-Gaeru” or "toad-frog" and is regarded as a minor deity, which possesses a good luck charm and has the power to attract wealth to its owner.

The restaurant was owned by Nui Onoue, a grandmotherly lady in her 60’s. She was a fervent disciple of bizarre rituals, and her toad was one of a kind: An amphibian Warren Buffett. It was incredibly successful in its role as a money magnet. At the peak of the Japanese stock market bubble, the toad would control a 20bn US Dollar stock portfolio, make Mrs. Onoue the largest individual shareholder in three of the world’s biggest companies and the wealthiest woman in Japan.

Mrs. Onoue: The Dark Lady of Osaka

Mrs. Onoue, who would later become known as “The Dark Lady of Osaka”, started her "professional" career working as a hostess in and around Osaka. During her job she befriended a wealthy and highly influential construction tycoon who funded her a restaurant called “Egawa”. The Restaurant was rather a private club where Osaka’s political and business elite, as well as more shady characters, were entertained.

Over time Mrs. Onoue had developed a reputation of being an astute stock picker among her guests. Whether her prescient stock picks were sheer luck or rather a result of insider information remains a mystery. But one thing should have been clear to everyone. It did not take a stock market genius to make money on the long side of the Japanese stock market during the go-go years of the bubble economy.

Be it as it may, her admiring customers were eager to know the secret sauce to her stock picks.

The Toad Has Spoken

Willingly, Mrs. Onoue ushered them to the 4th floor and showed them a one-meter-high ceramic toad. She instructed the audience to lay their hands on the toad’s belly, chanted some mantras, and dispelled the toad's wisdom in the form of stock market tips.

In normal times, even in highly superstitious Japan, spirits and ugly ceramic toads insufflating buy recommendations for listed companies would raise the spectre of any stock market investor. But heady bubble years are not normal years. And apparently Mrs. Onoue’s toad and ghostly advisers were too skillful to be ignored. Thus, top brokers, businesspeople, politicians and high- profile investors were flocking to Mrs. Onoue’s restaurant, not at all interested in eating tempura, but eager to join Mrs. Onoue’s seances in front of the leniently smiling “Gama- Gaeru” on the fourth floor.

Being invested in Japanese stocks during those go-go years was certainly an enriching experience overall. But, as we all know, not all stocks are created equal in a bull market. Some issues experienced inexplicable advances of epic proportions, a good few of them undoubtedly related to the revelations of the toad, baffling fundamental analysts and annihilating short sellers on their path to exponential growth.

Mrs. Onoue kept on striking one home run after the other on her stock market bets and, finally, would appear on the national broadcasting network, now performing her surreal rituals to the general public.

In the last inning of the stock market bubble, Mrs. Onoue would become a minor celebrity and, in a strange irony, even given a special award by the Osaka local government as ‘one of the city's most honest taxpayer. That despite the fact not having paid a single Sen in tax for four years.

The Toad Has Gone Quite

If the toad's ascendancy had ended here, it would have been little more than a story of unusual reptilian money- making skill. But unfortunately, not all the funds that “Gama-Gaeru” attracted were immaculate.

As word about Mrs. Onoue’s Midas touch spread, she was also visited by senior executives from the most prominent Japanese investment banks in the late 1980’s. According to the author Alex Kerr, by 1991 the Industrial Bank of Japan (IBJ) alone had passed Y240bn over to her, and 29 other banks and financial institutions had advanced her the staggering sum of Y2,800bn for her spiritual endeavor.

Unfortunately, the toad lost its divine touch shortly after. At the beginning of 1990, the biggest stock market boom in modern history had come to a grinding halt and was slowly morphing into a giant crash.

As Mrs. Onoue’s portfolio collapsed in synchrony with the Nikkei 225, she was forced to borrow massively to cover losses and to back loans. She would leave the spiritual path to riches and start a criminal career forging deposit documents. Helped by a branch manager of a small Osaka credit association she faked certificates worth a Y460 billion, almost as much as the entire deposit base held by the tiny bank, in order to obtain loans from other banks and non-bank financiers worth a 172 billion Yen.

Slowly, the public started to question how on earth a restaurant owner was able to amass such a fortune, and leading banks handing over to her ungodly amounts of money. Doubts were also raised about whose voice she was really listening to before she made her investment decisions.

Although in the past “Gama- Gaeru” got all the credit, more and more it dawned on the public that maybe her sugar daddy, and later a senior executive from Yamaichi Securities, a broker house that was already up to its neck involved in scandals surrounding stock loss compensation and Yakuza connections, had also been whispering into Mrs. Onoue’s ear.

Mrs. Onoue was  arrested in 1991 and eventually sentenced to 12 years in jail in 1998 for involvement in Japan's largest loan fraud. But there was further collateral damage. The most infamous being the chairman of the International Bank of Japan, the predominant man of the Japanese business elite. He was forced to resign in shame because of his strong ties with Mrs. Onoue.

And, last but not least, the toad. In the early 2000’s, a reporter of the Financial Times with a penchant for the unearthly, went trophy-hunting in Osaka, in search of the legendary toad. Unfortunately, the outcome was less than successful and the whereabouts of “Gama-Gaeru” remains a mystery.

Source:

HOW A LUCKY TOAD SPAWNED A BANK SCAM (afr.com)

The Celebrated Ceramic Toad of Osaka (hoaxes.org)

She Bilked Japan’s Banks in the Run-Up to the Lost Decade | OZY

Cassandra Does Tokyo: Infamy (nihoncassandra.blogspot.com)