A key prosecution witness testified Tuesday that Internet company Livedoor Co. doctored its earnings by selling and buying its own stock, as the trial of its former president, Takafumi Horie, entered its second day.
Hiroshi Onishi, president of an investment fund, said he was ordered on several occasions by a Livedoor executive to sell shares in the company to other firms he suspected were affiliated with Livedoor.
“I thought that they wanted to window-dress their earnings,” Onishi told the court, adding that he followed through on what he considered irregular trading practices partly because of the large commissions he stood to earn.
The testimony underlined similar arguments made by prosecutors Monday, the opening day of the much-anticipated trial of Horie, the brash 33-year-old Internet mogul who challenged the nation’s staid corporate culture during his rise to fame.
During Monday’s session, prosecutors outlined a complex scheme in which Livedoor executives used “dummy” companies to buy up subsidiary shares to inflate profits.
Livedoor had an affiliate acquire a company that was already under its control and sold stock in that company to doctor its books, and Livedoor’s string of stock swaps and other transactions were all conducted under Horie’s instructions, prosecutors said.
Lawyers for Horie, who has pleaded not guilty, argued that the charges were groundless, the transactions in question were completely legal, the companies weren’t dummies at all, and Horie didn’t know about the dealings anyway.
Onishi testified Tuesday that his buying and selling was done on the orders of Hideaki Noguchi, who headed a financial unit of Livedoor.
Noguchi, 38, was found dead in a hotel in Okinawa Prefecture in January in what police said was a suicide.
Onishi never said he had received instructions directly from Horie but said he was told by Noguchi that some of the stock he was selling had belonged to the defendant.
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