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2 Fall of Japan's apostle of 'greed
is good' By Hisane Masaki
TOKYO - A Japanese court has found
Yoshiaki Murakami, a former investment-fund
manager, guilty of insider trading in one of the
most high-profile scandals in Japan's corporate
history. Murakami was convicted of profiting from
the sale of shares in Nippon Broadcasting System
Inc (NBS), based on insider information obtained
from Livedoor Co, during the hard-fought takeover
battle.
The Tokyo District Court on
Thursday sentenced Murakami to two
years
in prison without suspension, an unusually heavy
penalty for the crime. The court also ordered him
to pay a fine of 3 million yen (US$24,600) and a
record surcharge of 1.149 billion yen. Murakami
immediately appealed the ruling. The court also
ordered Murakami's former fund, MAC Asset
Management, to pay a 300 million yen fine as an
entity for its involvement. The so-called Murakami
Fund is now virtually defunct.
Unusually
for Japan, where defendants often plead guilty in
hopes of a lighter sentence, Murakami strenuously
argued that the insider-trading charges against
him were based on flimsy evidence and
untrustworthy testimony. Nevertheless the court
accepted basically all the prosecutors' arguments.
The court ruled that Murakami not only obtained
insider information but in effect engineered
Livedoor's failed takeover bid for NBS.
"The defendant used his special position
as a professional to commit the crime. The total
price of the shares he purchased was extremely
high. It is recognized that he had an unreasonably
strong desire for profits. He deserves criticism,"
presiding Judge Kunihiko Koma said as he handed
down the ruling.
The prosecutors claimed
that Murakami raked in about 3 billion yen from
selling NBS shares after their prices shot up in
the wake of Livedoor's announcement that it was
planning to acquire a major stake in NBS during
the fierce takeover battle over the radio station
with Fuji Television Network. Murakami is alleged
to have personally pocketed at least 155 million
yen in the transactions involving NBS shares.
Murakami's individual assets are said to exceed 20
billion yen.
The conviction of Murakami, a
US-style corporate raider and self-styled
"shareholder who speaks up" at shareholder
meetings, came four months after the same court
found Takafumi Horie, the flamboyant founder and
former president of Livedoor, and several other
former Livedoor executives guilty of accounting
fraud and other securities-law violations. The
Murakami fund came under scrutiny when authorities
were investigating Livedoor.
The trial of
Murakami focused on when Livedoor decided to buy
shares in NBS and whether it took any action that
could be considered as providing insider
information to Murakami in violation of the
Securities and Exchange Law. The defense team
argued there are no records to support the
charges. The prosecutors demurred, with one of
them saying, "He [Murakami] lacked even the bare
minimum of ethics required of one who is involved
in securities transactions."
Immediately
before his arrest in June 2006, Murakami gave a
nationally televised press conference and admitted
to the charges of insider trading, but he
retracted this admission once the trial began.
Murakami continued to deny knowledge of the
takeover plan, and said he had merely acknowledged
guilt to avoid troubles for others. "I admitted to
the charges because I thought all of my fund's
executives would be arrested and the fund would
collapse if I denied the charges," Murakami said.
Only several days after being given a
three-year prison sentence in March, Horie himself
testified in Murakami’s trial. Horie said that his
decision to purchase NBS shares was made only just
before the February 2005 buyout try. "I made my
final decision right before the actual purchase,"
Horie said, challenging the prosecutors'
allegations that he and chief financial officer
Ryoji Miyauchi tipped off Murakami about the
takeover plan as early as November 2004.
Corporate management vs
funds Murakami - along with Horie - is
already seen by many as a person of the past in
the Japanese business world. Still, both the
Murakami Fund and Livedoor scandals have brought
deep - and still reverberating - repercussions to
corporate Japan as well as the nation's stock
market.
The two scandals dealt a serious
blow to public confidence in the fairness of
securities transactions. Also, after witnessing
the relentless onslaught by Livedoor and the
Murakami Fund on even some major companies, many
Japanese firms have become highly sensitive to
possible hostile takeover bids, especially from
foreign investors, and have rushed to take
defensive measures.
In the eyes of many
ordinary Japanese, Murakami and Horie seemed to
have a lot in common. They are relatively young in
a society still dominated by gray-haired business
leaders. They both rose to fame - and wealth - in
non-traditional business areas. They both shook up
the somewhat conservative Japanese business
environment. They had both frequently appeared on
television to express their views. Their
iconoclastic rhetoric and
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