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Japanese internet guru pleads not guilty

Livedoor boss denies securities law breach

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The unconventional internet businessman at the centre of a Japanese corporate scandal has pleaded not guilty to the charges against him by prosecutors.

Takafumi Horie was the chief executive of internet firm Livedoor until forced to resign in January.

Horie is accused of breaking securities law. Prosecutors allege that the 33-year-old former poster boy for the new economy conspired with others to massage Livedoor's profits to convey the impression that the firm still enjoyed growth.

Horie denied the charges. "I have not carried out, or instructed, such crimes as were mentioned. The indictment was written with malice," he told a Tokyo court on Monday. "It's regrettable that I've been indicted."

Horie became a media star in Japan where he was seen as mounting a brash challenge to the conservative business establishment, where business practices such as mounting hostile takeovers is frowned on.

He founded Livin' On the Edge, the predecessor company to Livedoor, in the mid 1990s as a small internet company and oversaw its growth into a stock market-listed titan worth $6bn. With frequent appearances on television and his casual business style, Horie had become a celebrity and had even been approached by Japanese prime minister Junichiro Koizumi and asked to consider being a political candidate.

When prosecutors raided the firm in January, $5bn of the company's $6bn stock market valuation was wiped off by plunging share prices in a scandal that shocked the whole Japanese stock market.

Four other Livedoor executives are standing trial and media reports in Japan have stated that some have made admissions to some of the charges against them.

The lawyer acting for Horie, Yasuyuki Takai, told the court that his client would be making no admission of guilt. "The prosecutors have forcibly scripted a story that makes it look as if there had been a major crime," he said. "The logic of their case does not stand."

Horie will face up to five years in jail and a fine of $43,000 if convicted, but more financially damaging could be any damages claims from investors in Livedoor, whose shares were delisted after the January raid.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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