Japanese PM grilled in parliament for supporting Livedoor entrepreneur
(AP)
Updated: 2006-01-23 15:20

The investigation into Internet startup Livedoor Co. spread to the political sphere Monday, with politicians grilling the prime minister over his support for the brash, young entrepreneur at the center of the scandal.

Jitters about the probe into Livedoor, an Internet portal suspected of violating securities laws, and its 33-year-old chief executive, Takafumi Horie, sent the Tokyo stock market down again Monday after it tumbled last week.

The whole affair is proving to be a major embarrassment for Prime Minister Junichiro Koizumi because of his party's backing for Horie in last September's elections.

During the campaign, top party officials stomped for Horie, a celebrity for his bold takeovers and defiant criticism of the stodgy old guard in corporate Japan. Horie and what he symbolized seemed to fit well with Koizumi's appeal for broader economic reform and fostering entrepreneurship.

Horie ended up losing his particular race in what turned out to be a landslide victory for Koizumi.

But with Horie now mired in a scandal, opposition politicians have been quick to seize the opportunity to attack the prime minister.

Seiji Maehara, leader of top opposition Democratic Party, accused the ruling party of exploiting Horie's fame and now has some serious explaining to do to the public.

"The Liberal Democratic victory is mere window-dressing that exploited such candidates" Maehara told legislators. "The prime minister and the ruling party cannot avoid ethical questions. The prime minister must apologize to the people."

Koizumi merely replied that the government was still monitoring the case because it was still under investigation.

News of the probe broke last Monday, when prosecutors raided Livedoor's offices and Horie's home on suspicion the company spread false information related to its takeovers. Media reports have also said the company is accused of hiding losses.

Speculation has been rife on when Horie will be questioned by investigators after his associates overseeing takeovers reportedly were questioned in recent days. Major daily Asahi Shimbun reported Monday that Horie may be questioned as early as this week. The Tokyo prosecutors' office declined to confirm the report.

Horie has repeatedly denied wrongdoing. His comments indicate that Livedoor employees didn't think they were doing anything illegal in their scheme using stock splits and buyouts that helped Livedoor and its affiliates' shares surge, making Horie an overnight millionaire and TV star.

Shares in Livedoor lost more than half their value last week, falling from 696 yen (US$6.03; euro4.97) Monday last week to 336 yen (US$2.91; euro2.41) Friday. Traders continued to dump Livedoor shares in Monday, but a price was not quoted because of heavy sell orders.

In the broader market, the benchmark Nikkei 225 lost 336.04 points, or 2.14 percent, to close at 15,360.65 points.

The Tokyo Stock Exchange placed Livedoor shares under a warning late Friday for not disclosing enough financial details about the recent allegations. The exchange is likely to consider delisting Livedoor if it's unable to answer to the allegations.

Livedoor said Monday in a statement it will continue to try to give more information answering to the allegations.