People read copies of a newspaper extra reporting the arrest of Livedoor Co. President Takafumi Horie (right below) in front of Roppongi Hills complex, where the company headquarter is housed, on Jan. 23.

The arrest culminated a weeklong investigation into Livedoor Co. that began with a surprise raid on its Tokyo headquarters and Horie's home Jan. 16.

Horie, who has been hailed as a symbol of a new breed of Japanese leader, has repeatedly denied wrongdoing.

"I have no recollection of any of the allegations. And I don't even know how to comment because I have no idea what kind of investigation the media reports are coming from," Horie wrote in his blog just before his arrest.

The Tokyo District Prosecutor's Office said Horie and three other Livedoor executives are accused of securities law violations, including releasing false information about affiliate companies to cover up losses at a subsidiary and boost its own stock price.

Livedoor is, among other things, suspected of pretending to have an affiliate acquire a company that was under its control and selling stock in that company to doctor its books, prosecutors said.

Arrested with Horie, who was replaced Jan. 24 as Livedoor president by Kozo Hiramatsu, 60, were Ryoji Miyauchi, Fumito Okamoto and Osanari Nakamura, all 38.

The investigation spread to the political sphere Jan. 23, with politicians grilling Prime Minister Junichiro Koizumi over his support for Horie, who ran for a Lower House seat in September.

Horie ran as an independent, but top party officials stumped for him because what he symbolized seemed to fit well with Koizumi's appeal for broader economic reform and fostering entrepreneurship.

Horie didn't win a seat, but with him mired in a scandal, opposition politicians have been quick to seize the opportunity to attack the prime minister and the nation's shoddy system of monitoring dubious corporate practices.

The Japan Times Weekly: Jan. 28, 2006
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