TOKYO (AFP) -Takafumi Horie, the young Internet entrepreneur once held up as a harbinger of a new brash Japanese corporate culture, was arrested on allegations his apparent success was a fraud.
Horie, the 33-year-old founder of Internet trailblazer Livedoor, was arrested with three other company officials in a scandal that sent markets plunging last week.
The man who once boasted that money could buy him anything is accused of illegal securities trading and cooking the books to hide losses, media reports said.
Prosecutors in a brief statement said that “the special investigation team arrested Livedoor President Takafumi Horie on suspicion of violation” of the Securities Exchange Law.
“We will do our best to prove the case by continuing cooperation with the Securities and Exchange Surveillance Commission,” it said.
Just a week ago, Horie was hailed as a pioneer in Japan’s button-down corporate culture who would show up to negotiate in a T-shirt and has loudly complained about how he was bored with slow decision-making.
Investigators first raided Livedoor’s office in the glitzy Roppongi Hills complex on January 16. Two days later the stock market went into freefall, forcing the exchange for the first time to shut down early to avoid a systems crash.
Horie on his blog Sunday denied any wrongdoing.
“What is being reported is something you have no idea where, how or who came up with it,” the pudgy university dropout turned millionaire wrote.
The top politicians and businessmen who once seized the opportunity to be spotted with Horie were distancing themselves from him Wednesday.
Horie was courted last year by Prime Minister Junichiro Koizumi and ran with his blessing — albeit not on his party ticket — in an unsuccessful bid for parliament.
Koizumi, under fire from the opposition in parliament Monday for associating himself with Horie, defended members of his Liberal Democratic Party (LDP) who had earlier praised the Internet guru.
“If any illegal business practices are found in the investigation, they have to be dealt with severely,” Koizumi said. “This is a different issue from that of some of the party’s senior officials supporting Horie in the general election.”
Koizumi courted Horie to run against one of his top rivals, Shizuka Kamei, who was expelled from the LDP for opposing the premier’s trademark plan to break up the post office monopoly.
Hiroshi Okuda, chairman of Toyota Motor and head of the Japan Business Federation, said Monday that the influential industry lobby may oust Livedoor from its membership.
“In this free economy, morality is very important,” said Canon President Fujio Mitarai, the vice president of the federation who will take over in May as its head.
“A free economy without morality will head to catastrophe,” Mitarai said. “We need to review corporate morality.”
The scandal took a grisly turn last week when a Horie friend and former Livedoor executive, Hideaki Noguchi, 38, was found in a pool of blood in a hotel in an apparent suicide.
Noguchi, vice president of H.S. Securities Co, had joined Horie and his company On the Edge before it renamed itself as Livedoor. He was allegedly involved in buyout deals prosecutors are investigating, reports said.
The Livedoor officials arrested Monday included Chief Financial Officer Ryoji Miyauchi, who was already questioned last week by prosecutors.