YOSHIAKI MURAKAMI, 46, the high-profile Japanese investor, who is also known as a shareholder activist, confessed to inside trading in the infamous Nippon Broadcasting System (NBS) deal on 5 June in a televised press conference. Though he maintains that he ‘unwittingly’ violated the Japanese securities laws, he has been arrested. He has also quit his fund MAC Asset Management, which has invested around $2 billion so far is a major shareholder in at least 30 listed firms. Interestingly, he shifted base from Japan to Singapore in March 2006.

 

Murakami, a former bureaucrat with the Japanese Ministry of International Trade and Industry, came under the scanner of the Securities and Exchange Surveillance Commission (SESC) of Japan during its investigation on Livedoor, an Internet business firm. Livedoor sought to acquire NBS in 2005, which was resisted by the radio broadcasting company. Eventually, it went to Fuji TV.

 

Livedoor, under the leadership of Takafumi Horie, was known for introducing American-style hostile takeover bids in the Japanese market. It even went on to acquire some firms in the USA in 2004.

 

While Livedoor was being investigated for flouting securities laws and not sharing correct information with its shareholders in January 2006, the investigators gathered that Murakami had an advance knowledge of the hostile takeover bid of the NBS. His fund became the largest shareholder of NBS at 18 per cent in 2004, anticipating a rise in share prices at the time of the takeover bid. Murakami’s fund sold most of its share to Livedoor in February 2005.

 

Horie, on the other hand, was more interested in controlling Fuji TV through NBS. The hostile takeover bid did not materialise, though the Japanese Supreme Court held that the bid was legal. It all ended in Livedoor selling its acquired share of NBS to Fujisankei Communications, the parent company of Fuji TV, and Fujisankei investing in Livedoor.

 

Livedoor was eventually delisted from the Tokyo Stock Exchange on 14 April 2006. Horie, however, was arrested in January 2006.

 

Murakami’s role in the entire saga become even more interesting given that he has always championed the rights of shareholders. He endeared himself to the Japanese media and younger managers by aggressively suggesting that companies owed efficiency and a higher value for shares to the shareholders. The advocates of better corporate governance recall his statements on Tokyo Style, after he acquired 11.7 per cent stake in it. He had publicly demanded explanation from the company as to why it did not have a clear investment strategy on $1 billion in cash and securities that it was sitting on.