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Published June 6, 2006

Arrested: Top Japanese fund manager with $16m S'pore penthouse


ACE Japanese fund manager Yoshiaki Murakami, who recently bought a penthouse in Singapore for a near-record $16 million, was yesterday arrested by the Japanese authorities after admitting that he might have infringed insider trading laws in deals involving a leading Japanese broadcasting company.

Mr Murakami: Moved his fund management operations to Singapore recently

While Mr Murakami, who also moved his fund management operations to Singapore recently, may not be able to enjoy his lavish 7,000-square-foot apartment and its built-in swimming pool for quite a while, seller Simon Cheong has little to worry about in getting payment.

Sources close to the transaction say the apartment in The Boulevard Residence in Cuscaden Walk has been fully paid for and therefore developer SC Global Developments, Mr Cheong's local listed business, will not have to look for a new buyer.

But it is not known whether the property, which cost $2,286 per sq ft, is registered in Mr Murakami's own name or that of his US$3 billion hedge fund, MAC Asset Management. Some have suggested that it could be in his wife's name.

Mr Murakami, one of Japan's new breed of high-flying financial entrepreneurs, said that he would resign immediately from the fund.

This latest drama comes within a few months of the downfall of another one-time star of Japan's corporate scene, Takefumi Horie, former head of Internet services group Livedoor.

Mr Murakami was a co-investor with Horie, who was arrested earlier this year and held for a lengthy period for questioning by prosecutors on charges of illegal securities deals and accounting fraud.

Horie has continued to deny any wrongdoing and Mr Murakami insisted yesterday during a nationally broadcast news conference that he 'did not intend to commit any crime'.

Some analysts suggested that this latest swoop by prosecutors could damage Japan's image among international investors, and the Nikkei 225 stock average fell 121 points to 15,668.31 after the news.

The link between Mr Murakami, a 46-year-old former Finance Ministry official, and 33-year-old Horie is Nippon Broadcasting System.

The Murakami Fund, an investment management company known formally as MAC Asset Management and which Mr Murakami has been managing from Singapore, bought a big stake in Nippon Broadcasting shortly before Livedoor launched a takeover battle for the broadcaster in competition with Fuji Television network.

According to Japanese media reports, prosecutors and the Securities and Exchange Surveillance Commission suspect the Murakami Fund bought shares in Nippon Broadcasting System last year based on advanced knowledge that Livedoor would make a takeover bid for the company.

The fund was subsequently able to profit from sales of the shares to Livedoor and others. Livedoor later sold its shares to Fuji Television, likewise for a large profit.

Corporate deals of this kind had been frowned upon in Japan until recently, although they appeared to find greater acceptance under corporate reforms introduced under Prime Minister Junichiro Koizumi's government. Mr Koizumi backed Horie's unsuccessful bid for election to parliament last year and feted the young entrepreneur, before appearing to disown him later.

Some political analysts have suggested that with Mr Koizumi's tenure as president of the controlling Liberal Democratic Party and as prime minister due to end in September, prosecutors, who enjoy a great deal of power in Japan, are sending a message to Mr Koizumi's successor that free-wheeling market capitalism of the kind practised by Horie and Mr Murakami will no longer be tolerated in Japan.

'I hope Japan will one day become a country that accepts people who challenge,' Mr Murakami said yesterday. 'This time I got a red card. I am going to leave the pitch at once and reflect.'

He said that he would resign from his investment management company, MAC Asset Management, but that it would continue to operate out of Singapore for the time being.

More than 100 companies and organisations invest in Mr Murakami's funds and about 60 per cent of these are US college foundations, he said.

During the seven years of operating his investment group, Mr Murakami doubled his investors' money to around 400 billion yen (S$5.6 billion), he added. Some analysts meanwhile voiced fears that investors could withdraw money from the Murakami Fund as a result of yesterday's events.

These have come at a time when the fund appeared to be on the brink of an investment coup. The Murakami Fund has built up a 47 per cent stake in Hanshin Electric Railway Company, an Osaka private railway operator.

Last week, a rival railway, Hankyu Holdings, offered to buy out Hanshin in a transaction that values the company at about US$3.5 billion.

MAC Asset Management said yesterday that it would consider selling its stake in Hanshin Electric Railway, and that it would contribute to the completion of the tender offer by Hankyu Holdings.