1. Where’s he now?
Ghosn, who’s 65, has been out on bail under stringent conditions since April while preparing his defense. He pleaded not guilty to all charges at a hearing in a Tokyo court in October. The trial will probably start in the first half of 2020.
2. What’s he charged with?
First off, violating the Financial Instruments and Exchange Law related to under-reporting of compensation and income — about $80 million in all — during the fiscal years 2010 to 2014. He also faces three counts of breach of trust. Both charges carry a potential maximum sentence of 10 years in prison and a fine of as much as 10 million yen.
3. What’s the issue with his pay?
Ghosn’s high pay was an image problem in Japan and he had been called out on it before. Starting in 2009, when Japan required companies to make executive compensation public, Ghosn’s reported pay fell to roughly half what he had been making before, but his deferred pay was said to have ballooned. Japanese law requires remuneration to be reported in the year it’s fixed, even if the payout happens later. (There are similar rules in Europe.)
4. What else?
The initial breach of trust charge involved a temporary transfer of personal losses on foreign-exchange transactions to Nissan in 2008. Two additional counts came after his release and rearrest, after Renault and Nissan were said to have uncovered payments that allegedly went toward such things as a yacht and Ghosn’s son’s tech fund, through intermediaries in the Middle East. On April 22 prosecutors filed an indictment accusing him of redirecting some $5 million from Nissan into personal accounts. He was granted bail again on April 25, with the amount set at 500 million yen.
5. What does Ghosn say?
That there’s a conspiracy against him involving the government and Nissan. When he was rearrested in early April he called it “outrageous and arbitrary” and declared: “I will not be broken.” Days later his lawyer, Junichiro Hironaka, released a nearly 8-minute video in which Ghosn said he worried about getting a fair trial. He said “backstabbing” Nissan executives, whom he didn’t identify, wanted him out because they feared their “autonomy” was under threat.
A Paris-based spokeswoman for the Ghosn family previously said that reports of payments through intermediaries and the startup are part of a smear campaign. In court in January, Ghosn said the agreements for deferred pay were non-binding “draft proposals” so didn’t need to be disclosed. His French lawyer said Ghosn didn’t get the deferred pay and there is no certainty he ever would have. Regarding the trading losses, Ghosn said Nissan took on two foreign-exchange swap contracts temporarily, with board approval, and transferred them back without incurring a loss.
6. Why the tension with Nissan?
Renault’s two-decades-old partnership with Nissan had become strained and Nissan’s then-CEO Hiroto Saikawa had striven to re-balance what he and others at the Japanese company viewed as an increasingly lopsided relationship. Ghosn had been pushing for an outright merger, which Saikawa and others opposed. Saikawa’s quick move to oust Ghosn and denunciations of his alleged misdeeds fueled conspiracy theories about a palace coup or attempt to push France out. Saikawa has called such theories absurd. In his video, Ghosn said Nissan executives were mismanaging the company and feared for their jobs. Nissan spokesman Nicholas Maxfield said: “The sole cause of this chain of events is the misconduct led by Ghosn.” In an unexpected twist, Saikawa was forced out by the board in September after a scandal over his own pay.
7. Why the long lock-ups?
Suspects in Japan routinely endure lengthy pre-trial detentions and repeated grillings by prosecutors without a lawyer present. Periodically rearresting a suspect on suspicion of new charges allows prosecutors to keep the suspect in custody while attempting to build a case or secure a confession. Bail is the exception more than the rule, and judges are less likely to grant bail to those who fight the charges. Legal experts say this is all a strategy to secure a confession and make a trial easier. In Ghosn’s case, the judge at a Jan. 8 hearing said his detention was due to flight risk and the risk of witness or evidence tampering. Ghosn holds French, Lebanese and Brazilian passports and has children living in the U.S.
8. What are his prospects?
Prosecutors have wide discretion in Japan to decide whether to go to trial. Tight budgets and a culture of wanting to save face mean they usually only pursue those they are sure to win. In 2015, a trial was requested in just 7.8% of cases overseen by the public prosecutor’s office. That helps explain why more than 99% of cases that go to trial end with a conviction. In England and Wales, the conviction rate is 87%.
9. Has Ghosn been mistreated?
In the March video he looked thinner and grayer but strong. While he was out on bail the first time, he had restrictions on the use of his mobile phone and the internet, could only use a computer offline at his lawyer’s office, had cameras monitoring his house and wasn’t allowed to leave Japan. His second release had similar conditions, which the court said were “meant to prevent the destruction of evidence.” While in jail, Ghosn’s wife Carole had criticized what she called his “harsh treatment” and said he’d lost 15 pounds (7 kilos). She said the family wasn’t allowed to contact him and that he underwent hours of questioning daily with only limited opportunities to confer with his legal team – also standard practice in Japan.
10. What’s the verdict on Japan’s legal system?
Maiko Tagusari, secretary-general of the Center for Prisoners’ Rights, said the Ghosn case has exposed “serious failings” in Japan’s criminal justice system, including lengthy detentions and interrogations with limited access to an attorney. Critics say those practices can lead to false confessions, such as the 2016 case of a woman released after 20 years in jail. The United Nations Committee Against Torture has expressed concerns. In 2017 Amnesty International said it had “raised concerns about the lack of rules or regulations regarding interrogations” during pre-trial detentions. The Japan Federation of Bar Associations has called for recording of interrogations. In response, the Japanese government says there are “strict judicial reviews at each stage” to balance the human rights of suspects with the needs of investigators.
11. What about Ghosn’s career?
Nissan ousted Ghosn as chairman three days after his initial arrest. Smaller alliance partner Mitsubishi Motors Corp. also removed Ghosn soon after. Renault, France’s largest carmaker, held off, citing the presumption of innocence. But on Jan. 23 Ghosn stepped down as chairman and chief executive. Ghosn lost his seat on Nissan’s board in April. In September, Nissan and Ghosn settled claims by U.S. regulators that they failed to disclose more than $140 million in pay to Ghosn. As part of the deal, he was barred from serving as a director or officer of a public company for 10 years.
12. What’s happening in France?
In April Renault said it had alerted French authorities after finding some of Ghosn’s expenses “involve questionable and concealed practices and violations of the group’s ethical principles.” Results of a separate audit ordered by Renault and Nissan of their joint subsidiary, Amsterdam-based RNBV, was sent to prosecutors in the French city of Nanterre in July. That report identified 10.9 million euros ($12 million) in questionable spending by Ghosn and others. A spokesman for Ghosn said all the expenses were “authorized and tied to legitimate business purposes.”
13. Who else has been charged?
Nissan has been indicted for under-reporting Ghosn’s income and faces around $6 million in potential fines if convicted. The auto company said it would strengthen its corporate governance and compliance and file amended financial statements once it has finalized the corrections. Former Nissan executive Greg Kelly – known as Ghosn’s gatekeeper and confidant – was indicted for allegedly helping him under-report income but was released on bail on Dec. 25, 2018. Kelly has denied the allegations through a lawyer.
--With assistance from Isabel Reynolds, Tara Patel, Kaye Wiggins and Ania Nussbaum.
To contact the reporters on this story: Lisa Du in Tokyo at firstname.lastname@example.org;Kae Inoue in Tokyo at email@example.com
To contact the editors responsible for this story: Emma O’Brien at firstname.lastname@example.org, Paul Geitner, Grant Clark
©2019 Bloomberg L.P.