Livedoor trial starts

The opening trial of the collapsed Japanese internet firm Livedoor got off to the worst possible start yesterday for founder and former chief executive officer Takafumi Horie when his ex-finance chief admitted to manipulating financial accounts.

Ryoji Miyauchi, one of four former executives and two accountants on trial from the scandal-hit firm, said at the Tokyo District Court that the charges against him were "basically correct" and expressed remorse for (infinity)ecausing trouble(infinity)f to so many people.

"I cannot exempt myself from responsibility," he said, although he claimed he was "unaware" that posting profits from sales of Livedoor stocks was illegal, in a statement widely seen as laying the blame for the scandal at the president's door.

Lawyers for Livedoor, which is itself on trial, also admitted to the bulk of charges against the company, as did two other defendants: Fumito Okamoto and Osanari Nakamura. One former executive, Fumito Kumagai, has pleaded not guilty to falsifying earnings, according to Japanese media reports.

In their opening statements, prosecutors said that the flamboyant Mr Horie, who denies the charges and goes on trial later, directed the firm's executives and accountants to window-dress accounts, artificially inflating business results by more than ¥4bn.

The 33-year-old former president is specifically alleged to have ordered his executives in a 2004-board meeting to boost projected profits from ¥3bn to ¥5bn; then later issued shares in firms the company already owned when the profits failed to materialise.

Most commentators last night concluded that the guilty pleas by Mr. Horie(infinity)fs top executives would play very badly for the once high-flying billionaire, who was released last month on bail of ¥300m after spending three months in a Tokyo detention center. Mr Miyauchi told the court yesterday that he had intended to plead innocent, but changed his mind after he read his former boss claiming in his blog that he knew nothing.

In a handwritten letter to the media after his release, Mr Horie said he was innocent of any wrongdoing. "I have not admitted to the charges and I also had no intention of ordering or approving illegal activities," he wrote.

Mr Horie said he had spent his time in detention reading and thinking about new business plans and had no regrets about his leadership of the firm. "I believe a corporate manager must aim for an expansion of operating profit and this belief has been the same before and after this incident."

The start of the Livedoor investigation in January sparked a mini-meltdown in Tokyo's Stock Exchange and calls for tougher financial regulations of Japan's financial markets. The company was delisted from the TSE in April after its shares had plummeted to just ¥94, down from ¥700 before the scandal broke.