Livedoor CEO Horie arrested
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Livedoor CEO Horie arrested

Takafumi Horie, the brash CEO of Internet firm Livedoor Co, was arrested on suspicion of violating securities law.

india Updated: Jan 23, 2006 18:14 IST

Takafumi Horie, the brash CEO of Internet firm Livedoor Co who shook up corporate Japan with his bare-knuckled business tactics, was arrested on Monday on suspicion of violating securities law, Japanese media reported.

A prosecutors' raid on Livedoor a week ago sparked chaos on the Tokyo stock market and sent share prices plunging.

Media reports have said Livedoor spread false information to investors, issued new shares to "acquire" firms already under its control and then sold them for a profit and padded its books.

Horie said in his Web diary on Sunday he had no recollection of Livedoor doing anything it was under suspicion for.

The pudgy, 33-year-old Horie with his designer T-shirts became an icon of a dynamic "New Japan" after a spurned attempt to buy a baseball team in 2004 and a rare takeover battle with a giant media group last year made him a household name.

Prime Minister Junichiro Koizumi even tapped him to run for parliament as a poster boy for reform in a lower house election last September, although he lost.

"If the law was broken, it is only natural to respond strictly," Koizumi told reporters on Monday.

Officials at the Tokyo prosecutors office and at Livedoor were not immediately available for comment on the reports, some of which said three others were also arrested.

College dropout Horie set up Livedoor predecessor Livin' On the Edge a decade ago with just $50,000 in capital.

Adopting an aggressive acquisition strategy and promoting himself as a brand symbol, Horie parlayed that into market capital of more than $6 billion just before last week's raid.

Investors' fears that other IT firms might also have fudged their books sparked a flood of sell orders on the Tokyo Stock Exchange last week, causing prices to plunge and swamping the bourse's computer system.

The exchange was forced to close early one day and curtail trading hours afterward, one of a series of computer glitches that have dealt a blow to its prestige.

Horie has many fans, but his flashy lifestyle -- he drives a Ferrari and owns a private jet -- and "making money is all" philosophy had drawn critics even before the raid.

"We look at this as 'Japan Inc strikes back," said one Western diplomat after the raid.


Japanese media said earlier that the Tokyo District Prosecutors Office was questioning Chief Executive Takafumi Horie after talking to Chief Financial Officer Ryoji Miyauchi, director Fumito Kumagai and others.

Livedoor, whose stock was put on special watch list on the Tokyo exchange, has lost about 64 per cent, or $4 billion, in value since the raid on its headquarters a week ago on suspicion that the company had spread false information to investors.

Its shares were flooded with sell orders on Monday and ended down by their daily 80-yen limit at 256 yen, a level that KBC Securities has calculated as a worst-case scenario break-up value if the group had to be sold off.

"The collapse of 'The Department Store of Crime' Livedoor is drawing nearer," Daiwa Institute of Research said in a research note. "Talk in the market about Livedoor going bankrupt or being broken up and sold is strong."

Livedoor's portal is one of Japan's most popular Web sites, but the group has a portfolio of nearly 50 Internet-related businesses ranging from consulting and software companies to network management, e-commerce and e-finance firms.

Analysts said, though, that the possible demise of Livedoor itself would have little economic impact.

The impact Livedoor would have on Japanese business if it were to disappear is "virtually zero," said one Tokyo-based analyst who declined to be named.

First Published: Jan 23, 2006 14:57 IST