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Mr. Takafumi Horie, the 33-year-old maverick businessman who built the Livedoor Co. empire from scratch, has entered the most difficult phase of his life, confined to sleep in an unheated, three-mat cell in the Tokyo Detention House — a world apart from his posh Roppongi Hills residence. The criminal charges against him are likely to be classic — window-dressing his company’s financial performance and making false statements to mislead the stock market.

But the significance of Mr. Horie’s rise and fall is much greater. It is something that induces thought about business philosophy in general and the values to be pursued by individuals in Japanese society today.

Despite his arrest, some young people continue to support Mr. Horie, known for his T-shirt-and-slacks attire in place of a suit and tie. They regard him as a rebel who has challenged the established order. Contributing especially to this perception was his attempt to buy a professional baseball team in defiance of the wishes of most baseball team owners and a hostile takeover bid aimed at controlling Fuji TV, Japan’s largest TV network. Some of them thank Mr. Horie for providing inspiration that even a young person without a formal pedigree can make it big in Japan these days.

Mr. Horie’s maxims such as “You can do anything if you have money” and “You can buy people’s hearts with money, and women follow (if you show them) money” have sounded fresh and iconoclastic to some young people. His words, though, are simply a straightforward expression of a conventional philosophy, held by many people — that money counts the most.

If some people think that emulating Mr. Horie is the only way to attain self-realization, it would seem that their vision is so narrow that they cannot acknowledge other meaningful values and cannot look at society with a truly imaginative eye.

It seems that Mr. Horie’s quest to expand the aggregate market value of his business group derived from his view of life. Methods used by Livedoor included window-dressing the parent company’s earnings by transferring profits of firms under Livedoor’s virtual control but not listed in consolidated financial statements, establishing “investment unions” to acquire firms through stock swaps, selling the stocks of Livedoor and its subsidiaries after their share prices peaked, and channeling the profits back to Livedoor.

Thanks to these tactics, Livedoor’s aggregate market value increased to as much as 730 billion yen at one point. But the expansion was not based on technological innovations or growth in Livedoor’s business activities. Livedoor has not created a completely new market, or a new sales or production method. Although Livedoor was originally an Internet services company, more than a half of the group’s “sales” have been attributed to financial services. Livedoor may have needed an aggressive merger-and-acquisition approach to compensate for the weakness of its principal business.

The story of Livedoor raises the question of how to measure the strength of an enterprise. It also serves as a reminder that a company preoccupied with making money through stock-market tactics alone rather than through the production of tangible products or services is a castle in the sky.

Prime Minister Junichiro Koizumi and the leadership of the Liberal Democratic Party have been criticized by opposition lawmakers for supporting Mr. Horie in the Sept. 11 general elections as an independent “assassin” candidate against a former LDP heavyweight who opposed Mr. Koizumi’s postal service reform plans. Mr. Koizumi has admitted that he wasn’t very prudent in backing Mr. Horie.

As exemplified by his purchase of shares of Nippon Broadcasting Systems, the largest shareholder of Fuji TV, in after-hours trading and a 30,000-for-1 split of Livedoor stock, Mr. Horie is a product of the stock-market deregulation carried out in the past decade. It is clear that Mr. Koizumi and the LDP supported the thinking and values embodied in Mr. Horie. If people start to believe that Mr. Koizumi’s reforms produce only a handful of rich people while keeping many others near the bottom of the social ladder, Mr. Horie’s indictment and trial could work against Mr. Koizumi and the LDP.

Scrutiny of Livedoor has underscored the importance of strengthening watchdog functions of government and quasi-government offices. The Financial Services Agency and the Securities and Exchange Surveillance Commission did not take any action against Livedoor. Instead, the prosecutors stepped in. In addition to making market rules transparent and fair, strengthening the order-processing capacity of the Tokyo Stock Exchange will also be more important.

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