The Securities and Exchange Surveillance Commission filed a criminal accusation with prosecutors Thursday against two accountants it alleges knowingly certified a falsified financial report by Internet firm Livedoor Co.

The two accountants are Taishin Hisano, 41, of Yokohama-based auditor Koyo & Co., and Motoshi Kobayashi, 51, who previously worked at Koyo and effectively directed the certification of the falsified 2004 report, according to an SESC official who briefed reporters. The accounting firm is expected to disband in late June.

Tokyo prosecutors are expected to charge the pair in the next few days based on the accusation.

Kobayashi was no longer at Koyo when Livedoor’s earnings report for the business year through September 2004 was audited, but had influence over the accounting firm, giving advice as he had audited previous financial reports, for the business years 2000 through 2003, the official said.

The SESC alleges that the pair conspired with Livedoor founder Takafumi Horie and other company executives to certify Livedoor’s financial report for the 2004 business year, knowing it was fraudulent.

The two accountants knew Livedoor padded sales figures in 2004 by about 1.58 billion yen, which was booked as profit from false deals with two companies Livedoor was in talks with over a possible acquisition, the commission has alleged. That is a violation of the Securities and Exchange Law.

The SESC said the accountants participated in the window-dressing because they did not want to create any problems by confronting Livedoor, a major client, and risk losing the business.

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