Greg Kelly leaves the Tokyo Detention House on Dec. 25. Photographer: Kentaro Takahashi/Bloomberg (Bloomberg)

Carlos Ghosn was a jet-setting captain of industry, the brash superhero who helped save both Renault SA and Nissan Motor Co. To the shock of many, he was arrested in Japan on Nov. 19 on allegations of financial misconduct. After 108 days in jail, he was released on bail of 1 billion yen ($9 million) -- among the highest ever in Japan -- only to be rearrested a month later on new charges, then granted bail again after just three weeks. As the legal drama unfolds and prosecutors seek to build their case, Ghosn’s alleged conduct isn’t the only thing under scrutiny. So is Japan’s legal system and its near-perfect conviction rate.

1. Where’s Ghosn now?

He’s out on bail under stringent conditions while preparing a defense for his trial, which may not start until next year. Authorities rearrested him April 4 as they pursued the new charges, saying they believed he might destroy evidence. The move came soon after Renault and Nissan were said to have uncovered payments that allegedly went toward corporate jets through an Amsterdam-based subsidiary, and toward a yacht and Ghosn’s son’s startup 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. Lawyers for Ghosn, who denies any wrongdoing, reapplied for bail and a court granted it on April 25, setting the amount at 500 million yen.

2. What was he charged with before?

Filing false statements to regulators regarding income from Nissan deferred until retirement – a total of $80 million. Starting in 2009, when Japan required companies to make executive compensation public, Ghosn’s reported pay was roughly half what he had been making before, but his deferred pay ballooned, said people familiar with the probe. Japanese law requires remuneration to be reported in the year it’s fixed, even if the payout happens later, according to Kyodo News. (There are similar rules in Europe.) Ghosn’s pay was an image problem in Japan and he had been called out on it before. He’s also been charged with aggravated breach of trust for acts including temporarily transferring personal investment losses to Nissan in 2008. Both charges carry a potential maximum sentence of 10 years in prison and a fine of as much as 10 million yen.

3. What does Ghosn say?

Not guilty. The 65-year-old called his rearrest “outrageous and arbitrary,” accused people at Nissan, whom he didn’t identify, of trying to silence him, and declared: “I will not be broken.” Days later his lawyer, Junichiro Hironaka, released a nearly 8-minute video in which Ghosn reasserted his innocence and said he worried about getting a fair trial. He also accused “backstabbing” Nissan executives of conspiring against him because they feared their “autonomy” was under threat.

A Paris-based spokeswoman for the Ghosn family previously said that reports of payments through intermediaries, use of the airplanes 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.

4. Why the tension with Nissan?

Renault’s almost 20-year partnership with Nissan had become strained and Nissan 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 said in January that he would resign in the coming months, but later was said to be planning to stay for at least three more years.

5. 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.

6. What are his prospects?

Prosecutors have wide discretion in Japan to decide whether to go to trial, and 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 for 7.8 percent of cases overseen by the public prosecutor’s office. That helps explain why more than 99 percent of cases that go to trial end with a conviction. In England and Wales, the conviction rate is 87 percent.

7. 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 and had cameras monitoring his house. His second release carried similar conditions, which the court said were “meant to prevent the destruction of evidence.” While he was jailed, 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. Two of Ghosn’s daughters told the New York Times in December that his cell was unheated, that he had asked repeatedly for blankets and that he had been denied pen and paper.

8. 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. Critics say lengthy detentions and interrogations with limited access to an attorney can lead to false confessions, such as the recent case of a woman released after 20 years in jail. The UN 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 reforms including recording of interrogations. The Japanese government responded by noting its system requires “strict judicial reviews at each stage” to balance the human rights of suspects with the needs of investigators.

9. 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 as chairman in December. Renault and its most important shareholder, the French government, waited longer, citing the presumption of innocence. But on Jan. 23 Ghosn stepped down as chairman and chief executive of France’s largest carmaker. Renault in April said it had alerted French authorities after its investigation found some of Ghosn’s expenses “involve questionable and concealed practices and violations of the group’s ethical principles.” Renault and Nissan are also auditing Amsterdam-based RNBV, their joint subsidiary, with preliminary findings showing “serious deficiencies in terms of financial transparency” and spending control procedures. Ghosn lost his seat on Nissan’s board in April.

10. 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 Dec. 25. Kelly has denied the allegations through a lawyer. Ghosn wants to be tried separately from them.

--With assistance from Isabel Reynolds, Kae Inoue and Tara Patel.

To contact the reporters on this story: Lisa Du in Tokyo at ldu31@bloomberg.net;Kaye Wiggins in London at kwiggins4@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net, Paul Geitner, Grant Clark

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