Trial of Livedoor founder begins

The trial of Takafumi Horie, founder and former chief of Japanese Internet portal Livedoor Co., began Monday morning with Horie pleading not guilty to violations of Japan’s securities law.

“I have not carried out, or instructed, such crimes as were mentioned,” Horie said as the trial began. “It’s regrettable that I’ve been indicted.”

Horie was arrested on Jan. 23, a week after a high-profile raid on Livedoor’s offices by public prosecutors. The charismatic executive was well known in Japan for his unconventional business ways, his casual dress and the aggressive mergers and acquisitions strategy that Livedoor pursued.

In the Tokyo District Court’s room 104 Monday, he sat listening attentively as the charges against him were read out. Wearing a dark suit, white shirt and blue tie, Horie occasionally flicked through documents in front of him or drank from a plastic bottle of green tea as the trial progressed.

Prosecutors allege in part that Horie instructed former Chief Financial Officer Ryoji Miyauchi and former Director Fumito Kumagai to increase Livedoor’s profit forecast for the second quarter of its 2004 financial year from ¥3 billion ($25.6 million) to ¥5 billion.

“Miyauchi then replied, ‘It’s dangerous. I think we had better not.’ But the defendant said, ‘That’s okay. We have to be positive. It’s cool to have a five-billion-yen figure’,” the indictment alleges.

Part of the case will also center on whether Livedoor established dummy investment partnerships with which to sell Livedoor stock for profit.

Horie’s lawyers denied that their client had anything to do with the alleged crimes.

“Prosecutors charge that Livedoor is involved in a serious crime, but most of the charges concern Livedoor Marketing and Livedoor Finance,” the lead defense lawyer told the court. “They are nothing to do with Livedoor the parent company. Prosecutors’ charges are based on their imagination.”

Horie’s arrival at the court was his first public appearance since late April when he was released from the Tokyo Detention House on bail of ¥300 million ($2.6 million. The case is attracting significant public attention. All of Japan’s major TV networks carried breathless live reports and special programming as the court case began. Around 2,000 people queued in front of the court in the morning hoping to get one of 61 seats open to the general public, local media said.

The case is scheduled to last until at least Nov. 28.

(Additional reporting by pool reporters.)