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Prosecutors now officially set their sights on Murakami Fund June 2, 2006

Posted by fukumimi in Finance, Japan, Politics.

The so-called Murakami Fund is apparently next on the Tokyo District Prosecutor's hit list.

The Nikkei was down 200 points at one point today, when news broke that prosecutors were going to question Yoshiaki Murakami, ex-MITI bureaucrat and de facto head of the group of companies known collectively as the Murakami Fund. 

Murakami  left his government job in 2001, aided by an approx $30M war chest provided by Yoshihiko Miyauchi, Chairman of ORIX, with whom he came to be on good terms as fellow advocates of financial market liberalisation.

He has become a household name as a activist shareholder who has made money by confronting complacent companies and demanding value to be returned to shareholders. He was involved with Livedoor's attempted takeover of Nippon Broadcasting, and is currently the largest shareholder of Hanshin Electric Railway Company, which is the target of a TOB by Hankyu Holdings.

The investigation is regarding the deal where Murakami sold his holdings in Nippon Broadcasting to Livedoor. 

Murakami's tactics have divided public opinion, and indeed he has failed to gain control of most of the companies he has taken on. However, he has skillfully managed make a lot of money from his dealings, his initial JPY3.8B is now said to be somewhere in the region of JPY500B, or $5 billion.  

Shares of companies where Murakami holds a large stake were hit hard today, companies like Matsuzakaya (department store), USEN (who also came to the rescue of Livedoor by forming a strategic partnership) were hit as was Hanshin Railways.  

Rumours about the prosecutor investigating Murakami are not new. He has made enemies in the establishment, not least for teaming up with Livedoor/Horie against Fuji TV. 

The real question is why now?

Is it a form of pressure to get Murakami to do what the establishment wants with regards to the Hankyu takeover of Hanshin?

Or is it a high profile media play to distract the public from some other news? The government announcing the re-commencement of US beef imports before Koizumi's trip to the US is seen as a near certainty, but public opinion is considerably negative regarding this issue. However Koizumi wants to go out with a bang, and take a big present with him when he goes to meet his buddy. I wouldn't put it past the government to announce the beef imports whilst the media is chasing around Murakami.


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