A Renegade’s Tale of His Scorn for Japan’s ‘Club of Old Men’
Here is an article that you might find interesting. I have been following this story for the past year and the developments have been fascinating . I agree with many of the points that Takafumi Horie has made with regard to the Japanese “old guard”. If you have read “Saving the Sun” it points out improper business tactics worse than what Horie is being accused of, but I guess fear makes people do desperate things. I can’t wait til they make the movie……
Larry
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A Renegade’s Tale of His Scorn for Japan’s ‘Club of Old Men’
TOKYO
FEW have risen and fallen as spectacularly as Takafumi Horie, 34, the self-made Internet billionaire now on trial in Japan‘s courts of justice and public opinion.
At age 31, he became famous overnight for trying to wrest a baseball team from a league controlled by some of Japan’s most powerful businesspeople, or, in his words, “the club of old men.” He turned his start-up, Livedoor, into a household name and built it with the kind of aggressive moves unseen here. A swooning media crowned the spiky-haired, T-shirt-clad, trash-talking upstart as the living challenge to Japan’s ossified establishment.
For 18 short months, Mr. Horie defied gravity. Then in early 2006, the offices of Livedoor, which had built an eclectic social network site, were raided, and he was arrested on charges of securities fraud; depending on one’s view of Mr. Horie, the charges amounted to just deserts or political payback.
Television networks showed his enemies gloating about his downfall, reinforcing the impression that the establishment, or some part of it, had decided to destroy Mr. Horie. He was transformed into the symbol of all that was bad about the new Japan and its supposed embrace of a ruthless, American-style capitalism.
Denounced and demonized, Mr. Horie has yet to be silenced. In a country where defendants face enormous pressure to plead guilty and criminal cases almost always result in convictions, he has fiercely proclaimed his innocence. And though his trial has yet to end, Mr. Horie has taken the extremely unusual step of speaking out to the media, leaving nothing unsaid.
“I’m being made into a bad guy through endless leaks from the prosecution to the media,” he said. “So when something’s wrong, I have to state that it’s wrong. Otherwise, they’ll set people’s image of me, and that’s not good.”
At the Tokyo District Court, prosecutors have demanded a four-year prison term for Mr. Horie, whom they accuse of having masterminded accounting frauds totaling more than $40 million and other securities violations at his company. Driven by greed, lacking a law-abiding spirit, Mr. Horie had shown no remorse and still presents a menace to society, they said.
“Isn’t it a fact that you raised the value of Livedoor shares, sold them and used the profits to pursue your personal interests and desires?” one prosecutor asked early in the hearing.
Mr. Horie replied: “You have a twisted mind. You should repent.”
He said Livedoor’s accounting practices were on the level. He has acknowledged misreporting the source of about $10 million, but blamed Ryoji Miyauchi, now 39, the chief financial officer. Mr. Miyauchi, who has pleaded guilty to similar charges against him, said in court that Mr. Horie was aware of the wrongdoing. But Mr. Miyauchi wavered on this point under cross-examination.
Mr. Horie said he was caught in the cross hairs of a Japanese establishment of elite bureaucrats — who he said do not want ordinary Japanese “to think too much” — and powerful business executive who fear the changes he represents. The infractions with which he is charged “are not something that typically merit a raid and arrest,” he said.
INDEED, by any standard, Mr. Horie has been treated very severely by the authorities. In Japan, companies have long engaged in financial window-dressing, often in collusion with accounting firms, though regulators have cracked down on this practice in recent years.
Despite the change, companies charged with accounting violations similar to or greater than Livedoor’s have been penalized by financial regulators but have not drawn criminal indictments. In November, for example, the Nikko Cordial Corporation, Japan’s third largest brokerage house, admitted to falsifying its books by $160 million, but the case was settled with a $4.2 million fine and the resignation of the company’s two top executives.
Mr. Horie is expected to receive his judgment in March.
During a two-hour interview in his lawyer’s office, Mr. Horie spoke with his characteristic self-confident, blunt and unguarded style. His lawyer, Yasuyuki Takai, was present but did not interrupt once.
Mr. Horie wore jeans and a black pullover with “Billionaire Boys Club” across his chest. (At the peak of Livedoor’s stock, his wealth topped $1 billion; it is estimated to have dropped to about a tenth of that.)
Mr. Horie often speaks of his youth in Yame, a city known for its tea agriculture, in western Japan. His father, a salaryman, never gave him an allowance but bought him only useful things, like a set of encyclopedias, which the boy devoured, and a bicycle, which he rode 12 miles a day to and from a famous private secondary school.
He started at the University of Tokyo, the nation’s top college, but dropped out to run the company he had founded with $50,000 in capital: Livin’ on the Edge, the predecessor to Livedoor. Consciously imitating American Internet start-ups, Mr. Horie built a very un-Japanese company where informality reigned. In contrast to most Japanese companies, employees were hired regardless of school ties, and they moved up thanks to ability and ambition, regardless of seniority or gender.
“The people who found me the most offensive are mid-managers with a stake in the old system — those in their 40s and 50s,” Mr. Horie said. Those people have invested decades in their companies, he said, in the expectation of enjoying the full rewards of senior status. “They don’t want the world they believed in and guarded until now to break apart, not after they’ve toiled for 20, 30 years without enjoying its benefits. They’re going to let this punk smash it all?”
He expanded Livedoor by buying up various businesses, then took aim at the core of Japan’s establishment by trying to buy a baseball team and part of the Fujisankei Communications Group. The establishment pushed back, accusing him of getting rich without the sweat of his brow and of playing a “money game.”
“I called them a club of old men, but that’s exactly what they are,” Mr. Horie said of the conglomerates that own baseball teams. “It’s a world of connections, that’s it. If you’re young, have no connections, and you’re from a modest family, there’s nothing you can do, your whole life. This is a big loss to society, a society in which you can’t put your talents to use. This kind of society will keep declining.”
His audacity won him the admiration of many Japanese, especially the young, who found him exciting and refreshing, even endearing. He may have dated models and driven around town in a Ferrari, but there was also in him the fat kid at school. He was nicknamed Horiemon, after a lovable pudgy cartoon cat named Doraemon.
DURING the 94 days he spent in detention, Mr. Horie was tried and convicted in Japan’s clubby news media. Leaks from the authorities fueled reports that Livedoor had laundered money and had ties to the underworld, though no such charges were filed. Investigators searched in vain through Mr. Horie’s private life for damaging information, according to Mr. Horie, his lawyer and a recently published book. (Prosecutors declined to comment on the case.)
“They printed out the photos and names and background information of dozens of women I’d met, and they pumped people for information about them,” he said.
Nowadays, with free time on his hands, he has pursued a lifelong interest in space travel by investing in the development of a new rocket. He watched “The Aviator” and felt a kinship with Howard Hughes, the billionaire aviation pioneer who is the focus of the film, “though I’m not as handsome as he is, or as obsessive-compulsive.”True to his character, Mr. Horie has not assumed the posture of contrition that Japan demands of someone in his predicament. He says he would not change the way he challenged the old men or tried to buy their companies, even though he failed.
“I enjoyed each occasion,” he said. “Instead of doing anything to succeed, I want to succeed on my own terms. Because if I can’t — I’m, like, ‘Whatever.’ “
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