investment

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True colors of advocate of shareholders' rights
- Akahata editorial (excerpts)

The Tokyo District Public Prosecutor's Office has begun searching the offices of the investment fund headed by Murakami Yoshiaki, former Ministry of International Trade and Industry bureaucrat, on suspicion of violating the Securities and Exchange Law banning insider trading.

In February 2005, Livedoor Co. illegally purchased shares of Nippon Broadcasting System Inc. (NBS), Fuji Television Network's parent company at the time, and suddenly became a major NBS shareholder. Murakami, who at the time had bought a large number of NBS shares, sold about 5,000,000 of them when the NBS stock soared, earning about 10 billion yen in profit.

Murakami allegedly suggested that Livedoor Co. founder Horie Takafumi buy up NBS shares.

While pretending to be representing the interests of shareholders, Murakami ignored the real value of corporations he was investing in, their public roles, and the will of their employees. He was only interested in ensuring profits for himself.

His stance was manifested in his recent move to acquire major stakes in Hanshin Electric Railway which was negotiating management integration with Hankyu Holdings.

How could Murakami become so powerful? Because his group found loopholes in the Securities and Exchange Law that made it possible for corporate investors like the Murakami Fund to delay reporting their shareholding to the government if the shareholding is not aimed at controlling business activities. However, by hinting that he has the intention to control Hanshin's business, by asking to become a board member of Hanshin, he is now pressing Hankyu Holdings to buy his Hanshin shares at a high price. If he sells his Hanshin stocks, he will earn 50 billion yen.

What the Murakami Fund is doing is exactly the same as speculators' activities during the bubble economy and era of vulture funds.

What made it possible for private funds like Murakami's to grow so rapidly was the government's deregulation of investment trust operations through amending the Securities Investment Trust Law and the Securities and Exchange Law. Who proposed this? It was Orix Corporation Chairman Miyauchi Yoshihiko. He chaired the "Regulatory Reform Committee" that promoted the deregulation in the interest of Japan's business circles.

The Murakami Fund was established with Orix as a major investor. Backed by Japan's business and political circles calling for a "change from 'savings' to 'investment'," Murakami became a top fund manager.

The government's financial administration is to blame for failing to regulate Murakami's activities, as was the case with the Livedoor scandal, until the long hand of the law finally reached the affair. The case of the Murakami fund must be thoroughly investigated, and the profit-first principle must be acknowledged as the root cause of this scandal.
Akahata, June 5, 2006