A Tokyo judge has made an example of Takafumi Horie by sentencing him to a
jail term of nearly three years.
The disgraced head of
the collapsed internet portal company was found guilty of false accounting and
stock manipulation by Judge Toshiyuki Kosaka.
Prosecutors said Livedoor had deliberately misled investors in 2004 by
reporting a pre-tax profit of about 5bn Yen to hide losses of 310m Yen.
One such fund, Kosaka said, ‘had nothing to do with Livedoor’s main business
… its purpose was to manipulate Livedoor’s accounts’.
Horie’s decision to plead not guilty to charges of making false financial
statements in a bid to hide Livedoor’s losses and boost its shares backfired
spectacularly as the judge imposed a custodial sentence.
Historically, Japanese captains of industry who have pleaded
guilty in accountancy fraud cases have avoided prison time with suspended terms,
but Horie’s refusal to admit any guilt was seen as a key factor in the judge’s
decision to send him to prison.
Horie, who within the space of a decade built the internet portal business
into an empire worth more than £3bn at its peak, maintained throughout the trial
that he had been targeted by traditional business interests appalled by
his meteoric rise which was founded on aggressive buyouts of other firms.
But in reaching his ruling Kosaka said Horie had masterminded the
construction of a network of dummy investment partnerships ‘for the purpose of
evading the law.’
‘At that point, the prosecution’s case was proven,’ he told a packed courtroom.
Commentators have drawn close parallels with the Enron trial, after chief
exec Horie was found guilty after key evidence was provided by former CFO Ryoji
Miyauchi. Horie’s lawyers had also claimed the prosecution had relied too
heavily on grey areas in the law’s treatment of aggressive takeovers.
Horie was released after posting bail of 500m Yen and is planning to
launch an appeal against the verdict.
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