Japanese Prime Minister Junichiro Koizumi's government came under fire from within the ruling party yesterday for supporting in last year's election an Internet whizz-kid now embroiled in scandal.
Takafumi Horie, the 33-year-old founder of Internet firm Livedoor, said on his personal Website that he has done nothing wrong although prosecutors were reported to be ready to grill him this week.
Heizo Takenaka, a key minister who has pushed Koizumi's postal reforms, had been most vocal among ruling party leaders in backing Horie before he lost on an independent ticket to an anti-Koizumi politician in the September poll.
Takenaka had extolled Horie as a champion of reform like himself and Koizumi during the election campaign.
"That responsibility is serious," Koichi Kato, a former secretary general of the ruling Liberal Democratic Party, told a television talk show. "He (Takenaka) gave Mr. Horie a sort of government guarantee.
"There were many people within our party who thought it was wrong," Kato said. "The premier said he could not check all (candidates) but it was not the case."
Yoshihiko Noda, chief of parliamentary affairs for the main opposition Democratic Party of Japan, told another talk show the scandal symbolized the strains in Koizumi's reforms, which he said emphasized the pursuit of wealth.
Livedoor, which has been aggressively engaged in corporate takeovers, is suspected of disclosing falsified financial information to deceive investors.
Prosecutors raided Livedoor and related premises, including Horie's home, on Monday last week.
Investigators have already grilled three Livedoor executives on suspicion that the company misled investors to hide losses and that a takeover by one of its affiliates broke securities laws, according to reports.
Livedoor's chief financial officer has told prosecutors he wasn't aware of irregularities in a corporate buyout, news reports said yesterday.
Livedoor Co. CFO Ryoji Miyauchi has also said the company's popular chief executive, Takafumi Horie, was not involved in the deal, the business daily Nihon Keizai Shimbun reported.
Miyauchi's denials came as the funeral of Horie's former colleague Hideaki Noguchi, found dead Wednesday in a suspected suicide, took place in Tokyo.
Media reports have alleged that Horie and Miyauchi, with the help of Noguchi, ordered the disclosure of false information during the takeover of publisher Money Life by a Livedoor subsidiary in 2004.
Livedoor allegedly concealed that it already owned the publisher through an investment fund subsidiary, according to the reports.
Two other executives of the Livedoor group, Fumito Kumagai and Fumito Okamoto, have also been questioned, and Horie would soon be summoned, the report said. Officials of the Tokyo Prosecutors Office were not available for comment yesterday.
The scandal forced the Tokyo Stock Exchange to close early Wednesday for the first time as a flood of sell orders threatened to cripple its computer systems.
Since then, Asia's top bourse has shortened its session by 30 minutes daily to prevent any technical problems.
The exchange said yesterday it has raised the number of stock trades its computer system can execute each day to five million from the current 4.5 million, as part of measures to deal with the recent surge in transactions.