JAPAN: Arrest of ‘Horiemon’ Casts Shadow on Reforms

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO , Jan 24 2006 (IPS) - The arrest of Takafumi Horie, Japan’s iconic young entrepreneur and president of ‘Livedoor’, the hugely successful web portal, has cast a shadow on the country’s much touted reform package that pushes privatisation as the key to an economic comeback.

”The arrest of Horie yesterday (Monday) is watched with a sense of loss and deepening distrust over the way the country is moving. The crash of Horie has reduced much of the shining glory of Japan’s new capitalism,’’ said Yuichi Kogure, an e-commerce analyst.

Underscoring this point is a new survey poll conducted by the ‘Yomuiri’ daily on Tuesday that shows the disapproval rating for Prime Minister Junichiro Koizumi’s cabinet standing at 56.1 percent, down 1.4 percentage points from the last survey in December.

More than 55 percent of the respondents said structural reforms, as promised by Koizumi during campaigning for September’s hotly contested general elections, has not progressed smoothly.

Kogure attributes the popularity drop, at least partly, to the arrest of Horie on charges of inflating stock values and fraud. ”People are getting worried. They now connect the rapid pace of reforms accelerated by the Koizumi Cabinet to the speedy rise- and (now the) fall of Livedoor.’’

Horie was not just the poster boy of the elections, called by Koizumi after he fired several of the party’s power brokers, but he was himself a candidate for the Liberal Democratic Party (LDP), sent to Hiroshima to take on the rebellious old warhorse, Shizuka Kamei.

Although Hori lost to Kamei, what was important to many was his being in the fray and giving it sizzle, rather than actually winning.

A dropout from the prestigious national Tokyo University, Horie’s rise has been watched intently – in awe by the younger generation and somewhat suspiciously by older people who viewed him as an upstart who shot into prominence in a space of just two years.

The T-shirt clad businessman, who borrowed 60,000 US dollars from a friend ten years ago to start a new joint venture and later launched Livedoor, and other affiliates reportedly that were valued at more than seven billion dollars this year.

Horiemon, as Horie called himself, after the ‘Pokemon’ series of cartoon creatures, represented Japan’s young, upcoming professionals raring to break away from the staid older generation with their ties, dark suits and sworn loyalties to the companies they slaved for.

And his very success seemed to proclaim him icon for the new Japan that Koizumi promised to build.

At the height of his phenomenal financial achievements in 2003-2004, he tried to buy up a professional baseball team and the giant media conglomerate Fuji TV. Again what was important was that he was in the fray, stirring things up in a new direction.

During campaigning for the general elections, Horie frequently appeared with the controversial Heizo Takenaka, minister for postal privatisation (and its colossal banking system) that was the main poll issue and supposed to spearhead Japan’s structural reforms.

Privatisation policies were criticized by some as contributing to national unemployment and increasing the number of households with no savings- 23.8 percent in 2005 mainly due to declining income.

But the victory of the LDP silenced critics and some of the credit went to Horie who represented positive change as exemplified by his own company’s Internet business and his promoting of stock trading and speculation that went against traditional Japanese values.

”He was a symbol of changing Japan. He was admired by the younger generation who liked his approach against the traditional corporate system that valued seniority and group harmony over individual performance,” explained Eichiro Tokumoto, a business writer. ”Horie promised hope for youth who did not want to plod along like their fathers who belong to the army of salaried workers tied to their companies. That dream has now crashed.”

A key aspect of the Horie trend is the rapid rise of stock traders among individuals in Japan – local media has reported more than 200,000 individuals bought stocks in companies owned by him-in contrast to the older generation who preferred to leave their savings in the bank.

Influenced by Horie, who spouts the philosophy that “if you are not an investor you are not a human being” in his books, even university students have begun to buy stocks on their mobile phones looking for short-term profits, sign of how Japanese society has begun to steadily represent American style capitalism, say experts.

Naturally, the arrest of along with three of his main directors who are also in their early thirties, on charges of spreading false information and tricking individual investors into buying Livedoor stocks, boosting profits, proved a huge shock for Japan.

”I am devastated to hear he cheated. But I still support Horie because he did bring much needed change to Japan,’’ said Kei Fuji, 30, a part-time worker.

Others contend the high profile case has raised the importance of improving stability measures to accompany Japan’s relentless march into a hard-nosed, western style capitalism focusing on the individual rather than social harmony.

”There is no turning back from reforming the staid way of doing things that led to weak global competition and resulted in the long economic recession in the last decade. What is needed is structural change that must be accompanied by stability such as tough legislation to ensure transparency and the protection of the individual,’’ said Yoshisuke Iinuma, analyst with the prestigious Oriental Economist magazine.