new biz strategy: kidnap rivals

Doug Henwood dhenwood at
Thu Oct 26 10:45:10 PDT 2000

Financial Times - October 26, 2000

Internet chief 'kidnapped rival' By Alexandra Harney in Tokyo

The former president of online music distributor Liquid Audio Japan was arrested on Wednesday on kidnapping charges.

Masafumi Okanda and four other men are suspected of abducting a Liquid Audio executive who planned to start a rival business in the US.

It is the latest in a series of problems at Liquid Audio, which investors once thought was one of Japan's most promising internet companies.

The first stock to list on the new Mothers - Tokyo's high growth exchange last December - Liquid Audio's shares have fallen 97 per cent since their February peak. At the party for the company's initial public offering, several people were dressed in the style of the Japanese Yakuza mafia. On Wednesday its shares closed down 12.2 per cent, or 50,000 at ¥361,000.

Police claim Mr Okanda kidnapped the 33-year-old executive in June last year. With the help of the other men, Mr Okanda allegedly blindfolded and handcuffed the executive and hid him in Tokyo hotels for two days before releasing him in a forest.

Mr Okanda, who had not been made president of Liquid Audio at the time, denies the charges.

He became president and chief executive of Liquid Audio Japan in November 1999 and held the post until September 27, when he resigned.

The kidnapped executive, who later started a company in Tokyo, was arrested a year later for hacking into his former company's computer system.

Established in July 1998, Liquid Audio Japan was, as of June 30, owned 44.23 per cent by Super Stage, a Tokyo investment company, 9.23 per cent by Hikari Tsushin, a mobile phone distributor, and 6.92 per cent by a US company called Liquid Audio.

Andrea Fleming of the US group said: "We are not the primary investor in Liquid Audio Japan, though they use our name."

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