Sacked Nissan boss Carlos Ghosn could be detained for ‘months’ before trial

Carlos Ghosn, the once high-flying boss of the world's most successful car alliance, has finally broken his silence. During a 10-minute hearing in Tokyo on Tuesday, the ousted Nissan chairman, who has been in held in a cramped cell for nearly two months, said he had been "wrongly accused and unfairly detained." Mr Ghosn said he had given two decades of his life to "reviving Nissan", the car company he is widely credited with saving from bankruptcy.

Mr Ghosn’s lead lawyer Motonari Otsuru said his client had lost 8-9kg since his arrest by Tokyo prosecutors as he stepped off his private jet on November 19th. He is prohibited from seeing his family under the terms of his detention. But Mr Otsuru said bail was unlikely and it could be “months” before his case comes to trial. Japan’s justice system allows lengthy pre-trial detentions while prosecutors gather evidence.

Mr Ghosn was initially detained on suspicion that he underreported his official compensation by millions of dollars. He was rearrested on December 21st on fresh charges that he offloaded his personal losses onto Nissan during the global financial crash a decade ago. Prosecutors say he misused Nissan funds for his personal gain, constituting an aggravated breach of trust.

Mr Ghosn was handcuffed until he arrived at the small courtroom, where he read a prepared statement. The statement said that during the 2018-09 crisis his bank “asked for an immediate increase” in collateral on about $17 million in currency derivatives, which he could not cover. He said he was forced to ask Nissan to temporarily take on the collateral but later used his own money to compensate the company, at no loss to Nissan.

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Mr Ghosn said allegations that he had received compensation from Nissan that was not properly disclosed, or that he had entered into any binding contract with Nissan to be paid a fixed amount that was not disclosed, were false. He said that “draft proposals for post-retirement compensation were reviewed by internal and external lawyers,” showing he had “no intent to violate the law.”

During a packed press conference after the court appearance, Mr Otsuru said the charge that Mr Ghosn was guilty of financial misconduct and breach of trust did not stand up because Nissan executives knew about his actions and green-lighted them.

Mr Otsuru declined to speculate on claims that Mr Ghosn had been elbowed out by Nissan but acknowledged that tensions between the company and its French partner, Renault, were part of the background to the case. Renault has a 43.4 per cent share of Nissan, as a result of the 1999 bailout of the company, which Mr Ghosn led. Nissan's share in Renault is a nonvoting 15 per cent. Nissan executives bristled that despite this lopsided arrangement their company poured over $3 billion (€2.6 billion) in pretax profits into Renault in 2017.

Mr Ghosn’s lawyers asked that he be freed on bail but his continued detention was always a foregone conclusion. The judge in the Tokyo District Court denied release on the grounds that Mr Ghosn posed a flight risk and could conspire to tamper with or destroy evidence. “In general in such cases in Japan it is indeed the case that bail is not approved before the first trial does take place,” Mr Otsuru told reporters.

Ghosn’s arrest has brought worldwide scrutiny of Japan’s criminal-justice system. Prosecutors in Japan have a great deal of discretionary power. Criminal suspects are not allowed to have a lawyer present during interrogations. Confessions support most criminal convictions. When people are accused of a crime, they have little chance of being proved innocent: the conviction rate for indicted suspects is over 99 per cent - roughly the same as China.

The incarceration has been accompanied by a steady trickle of leaks to the media. Almost as soon as the door to his cell slammed shut, stories began appearing about Mr Ghosn’s multiple homes and lavish lifestyle. Such leaks are part of a strategy by the authorities to soften public opinion, suggests Nobuo Gohara, a lawyer and himself a former prosecutor.

Before his arrest, as chairman and chief executive of Renault, Nissan's French partner, and head of Nissan and Mitsubishi, Mr Ghosn ran the world's most successful auto company. In 2017 the three firms sold 10.6 million cars, just ahead of Volkswagen, Toyota and General Motors.

The murky circumstances surrounding his arrest have fueled speculation that he was pushed out of Nissan, which was reportedly trying to block his proposed merger with Renault. Prosecutors acted on a tipoff from a Nissan whistleblower, which arrived just as they were experimenting with a new plea-bargaining system. Reportedly, they have struck a deal with a foreign Nissan executive.

Nissan officials have strongly denied the ‘palace coup’ theory and insisted their were fed up with Ghosn’s imperious style and lavish perks - which were far in excess of those enjoyed by the average Japanese boss. “Rather than a coup d’etat, this shows we had reached the limits of putting up with him,” one anonymous executive told The Asahi newspaper. “While I believe Ghosn was an outstanding corporate manager, I felt he left much to be desired as a human being.”

Mr Otsuru said despite losing weight during his ordeal, Mr Ghosn was bearing up well. “He is a rational person who is working hard on his release so his demeanour is calm, not angry.”