Trials spotlight Japanese business values

It's a Japanese identity thing, a quirky legal drama, and a generational standoff – with a touch of Wall Street-bashing.

The stars, or fallen stars, are two young Tokyo risk-takers once lauded as icons of entrepreneurial brio – but whose flip attitudes and behavior, not to mention alleged law breaking, are branding them as examples of what's amiss with the national spirit.

The separate arrests and ongoing prosecutions of Takafumi Horie and Yoshiaki Murakami took place with great speed. Less than a year ago, both men were flying high – admired, quoted, and sought out by Prime Minister Junichiro Koizumi.

Last Friday, Mr. Murakami pleaded not guilty to charges that he engaged in insider trading in a case that, last summer, nearly toppled the respected governor of the Bank of Tokyo, Toshihiko Fukui.

At a time when Japanese income gaps are steadily widening and wages have remained flat for five years despite an improving economy, the alleged white-collar criminals have captivated the Japanese media as symbols of fast-money flirtation and profit-mongering that breaks with the familiar old-boy network. Their ignominious behavior has also come to epitomize a perceived loss of traditional unity and public spirit in a society where even the wealthiest are expected to keep their heads down.

Mr. Horie, a cheeky dot-com baron who's tried to acquire baseball teams and TV channels, has been on trial for several months for lying about his Internet firm's earnings. Murakami, a Carl Ichan-like corporate raider, founded one of Japan's most successful investment funds. If convicted, they could face fines and jail time. Both plead innocence, though neither claims to be a choir boy of capitalism.

The twin cases revive slaps at what is widely seen as Japan's "Americanization" – translated as an attitude where making profits trumps the public good. Murakami is often given negative marks for his appreciation of the business style of New York financial house Goldman Sachs.

Observers on both the political left and right find some agreement on the public morality aspect: "Social cohesion is collapsing due to the lack of a public mind, and Horie and Murakami are symbolic of the entire approach of Japanese business society, which is all about money, money, money," says former finance minister Eisuke Sakakibara. "The prosecutors may have a priority ... that this trend should stop."

On the right, Masahiko Fujiwara, whose best-selling book, "Dignity of a Nation," focuses on restoring a samurai spirit in Japan, argues that, "Horie ... became a role model for youth, even a guru, despite the fact that he dropped out of Tokyo University.... He has no bushido spirit, no sense of values," he says, referring to Japan's traditional warrior code of conduct. "He's like an American, having the idea that everything can be bought with money."

Along with prosecutors' charges of "selfishness" and "aggressiveness," the two men are sharing headlines with a rash of suicides in Japanese schools – the result of pervasive bullying of students who don't fit in. Until the number of suicides in one month reached 13, the Education Ministry denied there was a bullying problem.

With an aging population and a diminishing number of unmarried 30-somethings, many are also lamenting the decline of Japan's famously white-shirted "salarymen." Instead, the country has witnessed a perceived swelling of the "freetah" class: Under-30 slackers who don't want to work full time.

Only months ago, Horie, (nicknamed Horiemon, after the cartoon Pokemon) was the epitome of the "cool biz" phenomenon. He wore no tie; had spiky, jelled hair; and was (and still is) beloved by bored Tokyo youths for his un-Japanese directness, lack of decorum, and Napsterish creativity. His own enthusiastic take on money, for example, is that it is a leveling element opening otherwise closed doors: "Money doesn't discriminate. Money doesn't care whether a person is poor, whether a person comes from a good family, or what his skin color is. Anybody can make money," Horie has said.

Japanese rarely speak so frankly, but the kids loved it. Horie's rap made him so popular that former Prime Minister Koizumi had him run for the Japanese parliament in the September 2005 elections. He was one of Koizumi's "political assassins" – a term most often used to describe attractive young women candidates sent in to shake up the Liberal Democratic Party and challenge old-line power brokers. Horie acted as something of a poster boy for a new, more-relaxed Japan. To everyone's surprise, he also nearly beat a venerable old-guard politician.

So when Horie was arrested and released last spring, his ride from jail to his fashionable Roppongi Hills apartment was a late-night televised frenzy with swarming helicopters and searchlights to rival O.J. Simpson's white-Bronco ride.

Now, Horie is in a hard seat with a public prosecutor in his face at Tokyo's high court. On Nov. 20, he took the stand for the first time to explain why, as CEO of the Internet firm Livedoor, he bore no responsibility for the firm's fabrication of hundreds of millions in profits, to hide actual losses.

It is unusual to plead innocence in the Japanese legal system, where stakes are high for those who lose their cases. Pleading guilty usually brings a lighter sentence, and less risk.

Staying in character, Horie fairly disavowed any meaning to the CEO title. "We just imitated US companies, and put CEO in my title to make it sound cool. There's no real significance to it," he said.