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Tuesday, March 13, 2007
Horie didn't like his job, he was just good at it
IT bad boy Takafumi Horie -- the entrepreneurial David taking on Japan's stodgy gray-suited corporate Goliath -- today stands accused of breaking not just business etiquette, but also the law in his quest to build "a company with the world's top market value."
Before his 2006 arrest for violating the Securities and Exchange Law, supporters applauded the impudent University of Tokyo drop-out-turned-mogul, who dared to hold press conferences in T-shirts and jeans.
He was hailed as a financial visionary for turning information technology venture Livedoor Co. from a Web design startup called Livin' on the Edge in 1996 into a financial powerhouse that would shake the status quo less than 10 years later.
Turning the corporate world on its head seemed a personal mission for Horie. But in an exclusive interview with The Japan Times, just days before he was to be judged by the Tokyo District Court, the straight-talking 34-year-old revealed that he never had much passion for business.
"I wasn't running Livedoor because I liked doing it. I did it just because I was good at it," Horie said. "Things went well and stockholders expected me to continue. So I did."
Wearing a navy blue sweater over T-shirt and jeans, Horie seemed eager to dash any notion that Livedoor was ever anything more than a hobby.
Asked how he feels today about Livedoor, in which he holds a 17.25 percent stake, Horie replied that it was nothing more than a company in which he owned some shares.
"I just want (management) to try to increase its value, just like any shareholder would," he said between frequent glances at his cell phone. Livedoor shares were trading at around 700 yen shortly after a stock split and before the firm was raided in January 2006 for alleged accounting fraud. By the time Livedoor was delisted by the Tokyo Stock Exchange last April, the share value had plunged to 94 yen.
Asked how he felt about Livedoor shareholders who are suing over their investment losses, Horie said "frankly speaking, I wish they would drop the case, but I don't feel anything beyond that."
Horie has been full of surprises since he entered the media spotlight, thus his agreeing to be interviewed while his criminal trial is still ongoing should be no shock.
His company started out in the shadows of larger Internet portals, including Yahoo! Japan, but grabbed public attention when Horie made a bid to buy a professional baseball team in 2004.
That failed, but Horie and Livedoor became household words. They continued to make headlines, especially in the 2005 attempt to acquire control in Nippon Broadcasting System -- at the time the largest stakeholder in Fuji TV -- by taking advantage of a trade loophole and buying shares in after-hours trading.
Snubbing traditional business practices, Livedoor expanded through mergers and acquisitions and diversified into everything from software development to securities and e-commerce. And by using stock splits to make Livedoor stock more affordable, the company appealed directly to individual investors, watching its shareholders swell to 220,000.
But then came the Jan. 16, 2006, raid on Livedoor, which triggered one of the biggest single-session plunges on the TSE.
Horie may have believed he was good at running his business, but authorities, informed by a self-proclaimed whistle-blower, instead believed he broke the rules.
Horie was arrested seven days later and subsequently charged with securities law violations, including cooking his IT venture's accounting books and spreading false corporate buyout information to inflate stock prices in the business year ending in September 2004. Stripped off his CEO status, Horie spent 94 days in detention before he was released from custody last April after making a 300 million yen bail.
He has maintained his innocence, in September pleading not guilty of the charges leveled against him.
Four other ex-Livedoor executives have also been charged with participating in the alleged fraud. Three have admitted guilt and one has claimed partial innocence.
In addition, two accountants accused of negligence for overlooking Livedoor's balance sheet irregularities both plead not guilty. The court will rule on them next week.
During the interview, Horie expressed frustration at prosecutors for the way they pounced on Livedoor. For one thing, he said, accounting fraud charges are usually made against companies that have effectively collapsed, but Livedoor was thriving. And if a company apparently violated some rules, the Securities and Exchange Surveillance Commission should approach it first and investigate, but they never did, he said.
So why was Livedoor raided so suddenly and without forewarning?
"Prosecutors must have thought that we were a criminal grab bag," said Horie, who noted grab bags usually do not contain anything interesting but people buy them for the excitement.
"I'm sure that especially those in a position to make decisions were under the strong impression that I was hungry for money and would do anything for it," added the author of several books, including "The One Who Makes Money Wins."
Horie said prosecutors may have thought their move would maintain market order, but instead it triggered a major plunge, causing the TSE's computer systems to crash in the process.
"They took a risk expecting a big return," Horie said. "That's great if you are an entrepreneur, but not if you are a prosecutor."
Even if they suspect something is amiss, prosecutors should be careful in going after entrepreneurial companies, lest they scare them from taking the necessary risks to expand their businesses, he said.
Horie made his closing argument in late January. He said he spent February traveling around the country, working out and dining with friends. In March he started responding to interview requests at his attorney's office in Tokyo's Ginza district. The court will read its verdict on Friday.
Nowadays, Horie is investing mainly in overseas projects, featuring a quest to realize space exploration and travel. Indicating he may have put corporate empire-building behind him, he said he doesn't feel the need to establish a company to pursue these projects.
"I don't see any meaning in corporations, so I don't really understand why people keep asking me whether I want to establish one again," he said. "From now I'll just do what I want."