Carlos Ghosn, the deposed chairman of Nissan Motor Co., was until recently a jet-setting captain of industry. To the shock of many, he was arrested in Japan on Nov. 19 and has been detained ever since in a murky case involving his personal finances, with no release date in sight. Ghosn’s alleged conduct is not the only thing under scrutiny. So is Japan’s highly efficient legal system and its near-perfect conviction rate.
1. What is Ghosn charged with?
Filing false statements to regulators regarding income from Nissan deferred until retirement – a total $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. 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 up to 10 million yen ($92,000).
2. What does Ghosn say?
In court the 64-year-old said the agreements for deferred pay were non-binding “draft proposals” so didn’t need to be disclosed. His lawyer has said Ghosn never signed the agreements. 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. His lawyers have said regulators looked into the case and didn’t file criminal charges.
3. Why’s he still locked up?
That’s not unusual in Japan, where suspects routinely endure lengthy pre-trial detentions and repeated grillings by prosecutors without a lawyer present. Suspects are often re-arrested on suspicion of new charges periodically to keep them in custody while prosecutors attempt to build a case. Bail is the exception more than the rule. 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 continued detention was due to flight risk and the risk of witness or evidence tampering. Ghosn holds French, Lebanese and Brazilian passports and his children live in the U.S.
4. What are his prospects?
More time locked up. An indictment is a sign that prosecutors intend to go to trial, which Ghosn’s chief lawyer, Motonari Otsuru, has said could be six months away. 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.
5. Has Ghosn been mistreated?
Ghosn’s wife Carole has criticized what she called his “harsh treatment” in prison and said he’d lost 15 pounds (7 kilos) since his arrest. She’s said the family hasn’t been allowed to contact him, and that he undergoes hours of questioning daily with only limited opportunities to confer with his legal team. Two of Ghosn’s daughters told the New York Times in late December that his cell was unheated, that he had asked repeatedly for blankets and that he had been denied pen and paper. Two days after he appeared in court Jan. 8 looking gaunt, he was being treated by a doctor for a fever that soon subsided. Otsuru said Ghosn had been moved to a larger room than when he was first incarcerated, with a Western-style bed, toilet and wash basin. Lebanon’s ambassador to Japan, who has visited Ghosn in the Tokyo detention center, was said to have brought him a mattress.
6. What’s the verdict on Japan’s legal 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. Amnesty International said in 2017 that 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.
7. Is anyone else investigating Ghosn?
Nissan says it’s conducting an internal investigation into “substantial and convincing evidence of misconduct” and accused Ghosn of misusing company funds – including in the purchase of homes in Brazil and Lebanon and hiring his sister on an advisory contract. Those allegations aren’t part of the criminal case but could be added. Nissan says its internal probe – sparked by a whistleblower – continues to broaden.
8. 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 confidante – was indicted for allegedly helping him under-report income but was released on bail Dec. 25. Kelly has denied the allegations through a lawyer. Meanwhile, Japan’s securities commission has asked prosecutors to indict the company, Ghosn and Kelly with additional charges.
9. How are others interpreting events?
Renault SA has retained Ghosn as chairman and chief executive officer, saying it needs evidence of his wrongdoing. 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 as Nissan chairman three days after the arrest and denunciations of his alleged misdeeds fueled conspiracy theories about a palace coup. Nissan spokesman Nicholas Maxfield told the Times such claims were baseless. “The cause of this chain of events is the misconduct led by Ghosn and Kelly,” he said.
--With assistance from Isabel Reynolds.
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