The president of beleaguered Internet and financial services company Livedoor pledged Friday to rebuild the company following the recent arrest of its founder and several executives on charges of securities law violations.
"We will rebuild our company and keep it going for the future," said Kozo Hiramatsu, speaking at the Foreign Correspondents' Club of Japan. "But this time we promise we'll grow our company with integrity, enhanced corporate governance, and compliance."
Through an aggressive mergers and acquisitions strategy, Livedoor had grown over a handful of years from a startup Internet venture into a mini-empire covering diverse fields including an Internet portal, Linux distributor, used-car sales, and finance.
However the company is now in dire straits after Tokyo prosecutors arrested Takafumi Horie, founder and then-president, and other executives on securities law violations. Livedoor's stock price dropped from ¥696 ($5.95) immediately prior to the raid to close at ¥121 on Friday. It will be delisted from the Tokyo Stock Exchange on April 14.
Hiramatsu was appointed to take Horie's position on Jan. 24, about a week after the raid and just after Horie was arrested. Hiramatsu said he took the job after a personal request from Horie.
"It was Wednesday noon and he asked me to come over to a small conference room in our office," said Hiramatsu. "Horie's eyes were very red because ... he hadn't had any sleep for about 48 hours. He said very seriously if something happens he wants me to take the president's position."
"Horie said very, very seriously that he did a lot of things to make the company grow but said, believe me, nothing was illegal. We never committed an illegal action, he said. He did everything very, very carefully and consulted many experts but he believed nothing was illegal," said Hiramatsu.
Tokyo prosecutors are still building their case against Horie and others and no hearing into the matter has yet to be held. The ex-Livedoor president remains at a Tokyo detention house.
Since taking the president's position, Hiramatsu held discussions with many potential partners and last week took its first major step on the road to what he believes is business recovery.
The company formed a business alliance with Usen, a provider of cable radio services that is rapidly moving into the online and multimedia space. In relation to that deal Usen President Yasuhide Uno personally bought a 12.75 percent share in Livedoor from Fuji Television Network for about ¥9.5 billion.
The two companies immediately formed a steering committee to oversee their alliance, said Hiramatsu. The committee will focus on three main areas: media content, institutional services and the technology and infrastructure areas.
"Yesterday [Thursday] morning we had the first joint committee meeting with Mr. Uno and I attended with about 30 executives and managers from the two companies. The two management teams clicked instantly from the outset. we were able to hold a frank discussion about the way forward for our companies and I personally felt as if we had been partners for many years."
The first joint business initiative from the alliance should be announced in the very near future, he said without hinting at what it will be.