TAKAFUMI HORIE, the charismatic internet entrepreneur at the centre of the Livedoor stock manipulation scandal, last night resigned as the company’s president from inside a Tokyo police cell.

Kozo Hiramatsu, the newly appointed president, bowed deeply in apology to shareholders and admitted that Livedoor had not cared sufficiently about corporate governance.

He promised to push the company to further growth but said that Livedoor’s new priority would be compliance. “Rules come first, then growth,” Mr Hiramatsu said.

Although Mr Horie, 33, still denies allegations that Livedoor falsely inflated its profits, he stepped down to take responsibility for a scandal that has mangled Livedoor’s shares and produced a week of wild volatility across the Japanese stock market.

Tokyo stock exchange sources said last night that Mr Horie’s resignation now made it virtually certain that Livedoor’s shares would be delisted by the end of this week — a decision that will deal a heavy blow to Japan’s retail investment community, which has supported the stock strongly since 2004.

The appearance of the new Livedoor president and his management team was in stark contrast to the image of the company crafted by Mr Horie. The new president is nearly twice Mr Horie’s age and all five executives were wearing dark suits and ties, the uniform of “old” Japan so vehemently rejected by Mr Horie.

Before joining Livedoor in 2004, Mr Hiramatsu spent 13 years at Sony and had a two-year stint as president of AOL Japan. But investors fear that without the blogging-obsessed Mr Horie’s vision behind the company, Livedoor will lose much of its energy and direction. One senior executive yesterday told a press conference that many Livedoor employees were intending to leave.

Although the company last night denied any intention to sell parts of its business, traders yesterday said that they were now thinking of Livedoor as a stock “only to be judged by break-up value”.

Mr Horie’s decision to step down follows an intensive week-long investigation into Livedoor’s business affairs, and his arrest on Monday evening along with three of the company’s key executives.

Ryoji Miyauchi, the group’s chief financial officer, also resigned. Police sources allege he was the architect of Livedoor’s complex series of stock-swap deals and share splits whose legality is now in doubt.

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