The nation’s securities watchdog has dispatched investigators to Switzerland to search for evidence that Livedoor group conducted money-laundering, unnamed sources said Friday.
The Securities and Exchange Surveillance Commission is also planning to send officials to Hong Kong and the British Virgin Islands, a known tax haven, to shed light on whether Livedoor used overseas financial institutions and companies to conduct dubious securities transactions, the sources said.
The Livedoor group is believed to have used accounts at Swiss and Hong Kong banks, and companies in the Virgin Islands, to deposit gains from sales of its shares it handed over to takeover target firms, which were in fact under control of the group’s investment partnership. Such money is believed to have been later transferred back to the parent company.
The bank accounts may have been used as part of money-laundering deals to hide the flow of such gains and give outsiders the false impression that the illicitly gotten gains were legal funds, investigative sources alleged.
Livedoor and its former president, Takafumi Horie, opened accounts at those financial institutions, the sources said. Prosecutors indicted Horie earlier this week for his alleged role in disseminating false financial information to the stock market.
The SESC and the Tokyo District Public Prosecutor’s Office suspect former Livedoor Chief Financial Officer Ryoji Miyauchi, who was charged along with Horie and two other former Livedoor executives, worked out the money-flow scheme in cooperation with a financial broker based in Tokyo who specialized in private banking services, the sources said.
They also allege a Japanese official of a Swiss bank living in Hong Kong participated at the request of the broker.
LDP eyes tougher law
The ruling Liberal Democratic Party proposed tougher punishments and other steps Friday to toughen the Securities and Exchange Law in the wake of the indictments of four Livedoor Co. executives.
The LDP wants to double the maximum prison term for violators to 10 years and impose new fines for fraudulent stock trading orders. It also wants to raise fines overall, LDP officials said.
The LDP proposal comes as the Financial Services Agency is preparing to enact a new investment service law to patch embarrassing holes in the Securities and Exchange and other laws spotlighted by Livedoor’s exploits.
Four now-former Livedoor executives, including ex-President Takafumi Horie, were charged Monday with spreading false information related to a Livedoor affiliate’s takeover of a publisher and releasing a false financial report.
One thing the LDP is keen on doing is increasing the transparency of investment partnerships, or unions. These entities, which are not strictly regulated, were reportedly used to great effect by the Livedoor group during investment operations.
The LDP also wants tougher measures to prevent stock splits from being used to boost market capitalization, another tactic Livedoor found useful in light of regulators’ abundant inaction.
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