- The Washington Times - Friday, January 27, 2006

Excerpts of editorials from around the world:

Asahi Shimbun

The Livedoor scandal

TOKYO — With the arrest Monday of Takafumi Horie, president of dotcom sensation Livedoor Co., we find ourselves wondering if the “champion of reform” who led a group with a market value of 1 trillion yen [$8.6 billion] was just another bubble business trickster.

Horie’s business strategy was always supported by shady tactics barely within the bounds of law, such as acquisitions of shares through legal loopholes and frequent stock splits to inflate capitalization. He defended such ploys, saying there was nothing wrong with taking advantage of legal loopholes. He insisted his deeds were legal.

However, the allegations suggest otherwise. What he did actually amounts to a grave betrayal of investors’ trust.

Horie often bragged about his ambition to make Livedoor the largest company in the world in terms of market value. But a company’s market capitalization should be supported by profits from real businesses. A management strategy focused obsessively on raising stock prices tends to tempt top executives to cover up bad news, for example, company losses.

The collapses of Enron and WorldCom of the United States were also triggered by disclosures of accounting fraud.

The arrests of top Livedoor executives didn’t just dampen the stock market and expectations in political circles. It seems that public expectations aroused by his high-profile business tactics were also grossly inflated because of the glitz of big money.

The scandal has raised many questions that must be examined by society as a whole as well as by investigators.

Financial Times

Kuwait’s oil wealth

LONDON — The oil riches of the emirate of Kuwait have always made it loom larger than its city-state size would warrant, both to a covetous West and predatory neighbors such as Iraq. But the way it has managed this month’s succession crisis makes Kuwait worthy of more serious attention, not least by its neighbors in the Gulf.

The death in mid-January of Sheik Jaber al-Ahmad al-Sabah, emir for the past 28 tumultuous years, triggered the automatic succession of his longtime crown prince, Sheik Saad al-Abdullah al-Sabah — normal practice among the autocratic monarchies of the Arab world. Sheik Saad, however, has been almost as incapacitated by illness as the late emir over the past five years, during which time Sheik Sabah al-Ahmad al-Sabah, half-brother to the dead ruler, has run the emirate’s affairs as prime minister.

[This week], Kuwait’s parliament unanimously voted Sheik Saad out of office after a week in power, putting a decisive end to a potentially chaotic transition. His powers have been transferred to the government pending the selection of a new emir, almost certainly Sheik Sabah. Things could have gone badly wrong at a time when oil prices, kept high by voracious demand, above all in Asia, are acutely sensitive to any hint of instability.

There had been more than a hint of upheaval after the rivalries inside the ruling al-Sabah family burst into the open last October.

After a Shakespearean dynastic struggle ended bloodily in 1896, the rival al-Jaber and al-Salem branches of the al-Sabah have alternated in power. That tradition will ostensibly be undermined if, as expected, Sheik Sabah, from the al-Jaber, takes a throne that Sheik Saad of the al-Salem barely had the chance to occupy. Sheik Salem al-Ali al-Sabah, the powerful head of the National Guard and leader of the al-Salem branch, had initially sought to prevent this outcome.

Though this jostle for power may not be over, for now it is the muscle of Kuwait’s institutions — in particular its parliament — that have won the day. Even though the al-Sabah continue to dominate the main offices of state, that is an exemplary outcome, which hopefully will resonate through the region.

The good news for governance may be less good for international oil companies, which this week expected Kuwait’s parliament to give them access to the emirate’s northern oilfields. That decision has again been postponed.

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