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LEAD: Horie says Livedoor is probing suspected illegal practice+(Japan Economic Newswire Via Thomson Dialog NewsEdge)TOKYO, Jan. 17_(Kyodo) _ (EDS: UPDATING WITH MORE INFO) Livedoor Co. President Takafumi Horie said Tuesday morning his company is conducting an internal investigation into allegations that a group company had given false information about a corporate buyout and inflated earnings results in a bid to boost its stock price. At a press conference held after prosecutors ended their all-night raids into the Internet company, Horie, who has become well known in Japan for being an outspoken entrepreneur and his newly amassed wealth, said the firm will make the results of the internal probe public as soon as possible. Horie also said the raids would not have a negative impact on Livedoor's operations. "We will continue normal operations," he said. "There is no particular problem with our business, we want to make business expansion efforts." Suspecting systematic misconduct, prosecutors will question Horie in order to investigate the business conditions of the fast-growing Internet business group, according to sources close to the investigation. The Tokyo District Public Prosecutors Office and the Securities and Exchange Surveillance Commission, the nation's securities watchdog, jointly launched raids Monday evening at Livedoor's head office in Tokyo's Roppongi Hills business and commercial complex and other locations, including Horie's apartment there. According to prosecutors, Value Click Japan Inc., now called Livedoor Marketing Co., announced in October 2004 that it would turn a publisher, Money Life, into a wholly owned subsidiary through a stock swap. But Money Life had already been effectively controlled by the Livedoor group at that time because an investment fund, financed by Livedoor, had taken a 100 percent stake in the publisher, the prosecutors said. In January 2005, Value Click implemented a one-for-one stock swap with Money Life to make it a wholly owned subsidiary, they said. The prosecutors also suspect Value Click had inflated profit figures in its financial statement released in November 2004. The prosecutors believe Value Click gave the false buyout information and inflated earning results in a bid to boost its stock prices. Such practices violate the Securities and Exchange Law, they said. When Value Click made an announcement about making the publisher into a subsidiary Oct. 25, 2004, the closing price of its stock on the Tokyo Stock Exchange's Mothers market for start-ups was 179,000 yen. After the release of the financial statement, the closing price of its stock on Nov. 24, 2004, was 445,000 yen. Value Click, established in November 1998, became a Livedoor subsidiary in March 2004. In June 2005, it changed its name into Livedoor Marketing and turned into a Livedoor affiliate in August that year with Livedoor's stake falling below 50 percent. Livedoor, its predecessor company founded by Tokyo University dropout Horie in 1996, has drawn media attention since 2004, when it tried to enter the professional baseball business. In 2005, the company, listed on the Mothers market, attempted to acquire radio firm Nippon Broadcasting System Inc. through a high-profile battle with Fuji Television Network Inc. Although both attempts failed, the 33-year-old Horie's efforts to take on the Japanese business establishment were welcomed in some circles, especially among young people. The flamboyant entrepreneur also ran in the general election held in September last year after he accepted Prime Minister Junichiro Koizumi's request to run against a Liberal Democratic Party rebel. But Horie failed to win a seat. Livedoor has enjoyed a surge in overall sales through a series of acquisitions, including those of accounting software provider Yayoi Co. and Livedoor Securities Co. Livedoor became part of the Japan Business Federation, Japan's biggest business lobby, Nippon Keidanren, late last year. |