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Japanese Internet CEO is Arrested

The founder of one of Japan's most popular internet companies, along with three of his top executives, have been arrested - the climax to a week of raids and leaks from prosecutors that have captivated the country and sent Japan's stock markets tumbling.

Prosecutors late Monday arrested four top executives of one of Japan's high-profile Internet companies for alleged fraud, including its famous founder and chairman, Takafumi Horie.

Authorities say Horie and other executives of the company, called Livedoor, were taken into custody on suspicion of manipulating stock prices and conspiring to misrepresent the company's finances.

Horie, a 33-year-old dropout from Japan's most elite university, denied in an Internet posting Sunday that he had done anything illegal. That was his last public comment before he was called in Monday for questioning by the prosecutors.

Also arrested: Ryoji Miyauchi, who is Livedoor's chief financial officer; a company director, Fumito Okamoto, and the president of a Livedoor subsidiary, Osanari Nakamura.

The criminal case has caused chaos in Japan's stock market. Panic selling after the company was first raided last week sent stock prices sharply lower, and then overwhelmed the Tokyo Stock Exchange's computerized trading system.

The case also has political ramifications.

Horie was selected by Prime Minister Junichiro Koizumi to run for parliament last year against a senior politician who had broken with Mr. Koizumi's Liberal Democratic Party. Horie lost that election, but political pundits predicted that he would win if he tried again. That now seems unlikely.

Mr. Koizumi, reacting to news of Horie's arrest Monday, said that if any laws were broken, it is only natural for the authorities to respond.

But the prime minister also praised Horie for his pioneering spirit, saying in this new era of business, it is very important to challenge the status quo.

Horie had become a hero with a rock-star-type following among many young Japanese. The casually dressed and outspoken entrepreneur parlayed a $50,000 investment a decade ago into a portfolio of "dot.com" companies worth $6 billion on paper.

Livedoor in the past two years also tried to take on the conservative business establishment, by making attempts to purchase a professional baseball team and a broadcast network. Both of those attempts failed.

After police raided Livedoor's headquarters last week, the company lost half of its market value, and the stock now faces delisting from the Tokyo Stock Exchange.

Horie's fall from grace has been swift. Analysts and commentators, who just recently were lauding him and his executives as business geniuses of the New Japan, are now referring to their enterprise with such phrases as "the department store of crime."

 


Steve Herman

A veteran journalist, Steven L Herman is the Voice of America Asia correspondent.
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