Japanese prosecutors arrested a fifth executive yesterday at Internet firm Livedoor Co and served new arrest warrants on its flamboyant founder Takafumi Horie and three associates, reports said.
Livedoor director Fumito Kumagai was arrested on suspicion of involvement in falsifying company results, Jiji Press and other media reported, citing prosecutors.
Kumagai, 28, is described by media as the right-hand man of Livedoor President Horie, who was arrested last month along with three other executives on suspicion of breaking securities law.
Prosecutors also served fresh arrest warrants on Horie, 33, and his three associates already behind bars, enabling them to be detained for further questioning, the report said. These four were first arrested on Jan. 23.
Investigators believe the five cooked the books to hide losses in Livedoor's results for the year to September 2004, the reports said.
The alleged earnings manipulation amounts to about ¥5.35 billion (US$45.1 million), Jiji said.
Horie has told investigators that he gave instructions that Livedoor should report a profit in the period in question but insists that he was not involved in manipulating earnings, according to another report.
The brash entrepreneur has said that he told his staff a loss was unacceptable and that a profit must be achieved, the Nihon Keizai Shimbun business daily reported, citing an unnamed source.
But it said Horie had insisted his remarks were a call to aim for a profit through legitimate efforts.
The Tokyo Stock Exchange is believed to be close to delisting Livedoor shares, which have plummeted since the scandal broke.
"If Livedoor is proven to have infringed the bourse's rules or the securities and exchange law, then we can delist the company," TSE president Taizo Nishimura told a press conference on Tuesday.
Even so Livedoor shares jumped ¥8 or 12.5 percent to ¥72 following a report that funds controlled by US investment advisory firm Scion Capital had acquired a stake of 5.52 percent in the Internet firm.
This is the first known instance of a large purchase of Livedoor shares since news emerged of a probe into the company for alleged securities law breaches which resulted in a sharp slide in the share price.
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