Brash Japanese Internet entrepreneur arrested

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The arrest, however, is proving to be a major embarrassment for Prime Minister Koizumi because of his party’s backing for Horie in last September’s elections.

During the campaign, top party officials stumped for Horie, who ran as an independent but clearly had the party’s support. What he symbolized seemed to fit well with Koizumi’s appeal for broader economic reform and fostering entrepreneurship.

Horie ended up losing his particular race in what turned out to be a landslide victory for Koizumi.

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But with Horie now mired in a scandal, opposition politicians have been quick to seize the opportunity to attack the prime minister.

At a parliamentary session prior to Horie’s arrest, Seiji Maehara, leader of top opposition Democratic Party, accused the ruling party of exploiting his fame and saying it now has some serious explaining to do to the public.

“The Liberal Democratic victory is mere window-dressing that exploited such candidates” Maehara told legislators. “The prime minister and the ruling party cannot avoid ethical questions. The prime minister must apologize to the people.”

Koizumi merely replied that the government was still monitoring the case because it was still under investigation.

News of the probe broke last Monday, when prosecutors raided Livedoor’s offices and Horie’s home on suspicion the company spread false information related to its takeovers. Media reports have also said the company is accused of hiding losses.

The Tokyo Stock Exchange placed Livedoor shares under a warning late Friday for not disclosing enough financial details about the recent allegations. The exchange is likely to consider delisting Livedoor if it’s unable to answer to the allegations.

Shares in Livedoor plunged to 256 yen ($2.20) on Monday, down the maximum amount of 80 yen (69 cents) that a stock of its price is allowed to fall for the day. A week ago, they were trading at 696 yen ($6.03).

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