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Thu, Jan 26, 2006 - Page 12 News List

Livedoor cooked it books, ex-CFO says

SCANDALThe Japanese Internet company's former chief financial officer told prosecutors Livedoor used some creative bookkeeping to turn a loss into a profit on paper


An arrested Livedoor executive has admitted that the Japanese Internet firm cooked the books during its bid to buy a baseball team that propelled its young chief to celebrity, media reports said yesterday.

Former chief financial officer Ryoji Miyauchi admitted Livedoor declared a profit of ¥1.4 billion (US$12.2 million at current rates) to cover up a loss of ¥1 billion in the year ending September 2004, the reports said.

Livedoor's flamboyant chief Takafumi Horie, now 33, was aware of the fraud in which the company took ¥2.4 billion in profits from affiliates so it could post the profit, Miyauchi told prosecutors, according to the Yomiuri Shimbun and Asahi Shimbun.

Livedoor declared its intention to acquire a financially struggling baseball team in June 2004, with Horie winning a media spotlight by challenging the old-economy companies that run Japanese baseball clubs.

His attempt failed as the Nippon Professional Baseball turned to another Internet upstart, Rakuten, to create a new baseball team in September that year.

Horie, Miyauchi and two other executives were arrested on Monday over the scandal that briefly caused market turmoil and put pressure on Japanese Prime Minister Junichiro Koizumi, who had courted Horie to run for parliament.

Horie, who has denied the allegations, and Miyauchi on Tuesday stepped down from their positions at the company.

Shares in Livedoor changed hands for the first time in seven trading days yesterday, with buyers emerging amid a probe into the disgraced Internet firm that triggered an avalanche of sell orders.

Sizable buy orders emerged yesterday afternoon amid growing speculation that investment funds may take over the troubled firm, brokers said.

The stock traded at ¥155 per share yesterday afternoon, down some 80 percent from last Tuesday. Livedoor ended the day's trading at ¥137, down ¥39 from Tuesday.

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