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ANALYSIS

Japanese prosecutors indict Carlos Ghosn, but do they have a solid case?

Toru Hanai, Reuters | Press teams gather in front of the Tokyo District Public Prosecutors Office Nov. 19, 2018.

After being held for three weeks without charges following his shock arrest, Carlos Ghosn was indicted Monday for financial misconduct. But the case has put Japan’s notoriously opaque criminal justice under the international spotlight.

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Prosecutors in Japan on Monday indicted Carlos Ghosn, the former president of Nissan Motors, on charges of under-reporting his pay as head of Nissan by about €40 million over five years, and re-arrested him and his aide, Greg Kelly, for misreporting compensation for three additional years.

The authorities also indicted Nissan Motor Co. for making false statements in its annual reports.

Japanese media have reported that Ghosn signed a secret agreement with Nissan in 2010 to defer payment of half his annual compensation until after his retirement, in an effort to make his salary appear smaller in the eyes of shareholders and employees. Two senior managers at Nissan are said to have provided evidence in a plea bargain with the prosecutors.

Ghosn’s shock arrest and prolonged detention have already sparked international concern.

FRANCE 24 spoke to Nobuo Gohara, a lawyer and former prosecutor who specialises in corporate governance, about the case.

FRANCE 24: Carlos Ghosn has been indicted for violating Japan’s Financial Instruments and Exchange Act and lying to financial authorities. But prosecutors didn’t pursue criminal charges against former executives of Toshiba over a much larger, €1.2 billion accounting scandal in 2015, in violation of the same law. What’s different in this case?

Nobuo Gohara: Prosecutors may have been keen to pursue a high-profile case to showcase the success of plea bargaining, a new measure introduced to Japan’s criminal justice system in June. But it was still almost beyond belief to arrest Mr. Ghosn on such a technical violation without damage.

Toshiba’s case constituted a massive accounting fraud and prosecutors should have made an utmost effort to bring the company to justice. Japan’s financial watchdog was willing to bring the offenders to trial but the prosecutors’ office refused to take up the case. I think the reason was that they felt they didn’t have the ability to investigate an accounting scandal involving such a big company and did not want to risk ending their probe without an indictment. In comparison, Ghosn’s case has much fewer things to prove, and therefore much easier for prosecutors to tackle.

F24: How long can the trial last?

NG: This is an unprecedented case, and it’s impossible to guess how long it will take before a verdict is delivered. On top of that, the degree of CEO Hiroto Saikawa’s involvement in the scandal could become the focus of the investigation. Recent media reports suggest that Saikawa had signed an agreement about Ghosn’s post-retirement remuneration, which means that he cannot be considered an innocent bystander in the case. Saikawa has been CEO for the past two years and played a central role in filing annual corporate reports.

F24: Japan has a reputation for its draconian criminal justice system, with a chilling 99.9 percent conviction rate. But while the system is skewed towards the prosecution, a number of false convictions have also been made. How could a fair trial be guaranteed?

NG: The extraordinarily high conviction rate indicates that in Japan, whether a suspect is guilty or not is almost solely decided by prosecutors. Even if the prosecutors wrongly indict a suspect, it is extremely difficult to reverse that decision in court. Few judges are willing to deliver an innocent verdict. And this has led to some false convictions.

The biggest problem is the so-called ‘’hostage-based’’ criminal justice system. Suspects who insist on their innocence tend to remain in custody for a long time. This is linked to Japan’s high confession rate, and the assumption that a suspect who denies wrongdoing deserves to suffer disadvantage. It is also easier to prove guilt at a trial if there is a confession. Judges, as well as prosecutors, try to avoid a situation where the accused claims innocence in court.

The presumption of innocence only exists in principle. While ostensibly treating a suspect as not yet guilty, Japanese media are keen to report on details of alleged crimes based on leaked information. Backed by the 99.9 percent conviction rate, the media also assume that an arrest automatically means a guilty verdict.

F24: A 2010 scandal in Osaka involving evidence-tampering by a prosecutor and a cover-up by his bosses shocked the nation and eventually led to some reforms of the criminal justice system. Have there been any real changes?

NG: Not really. If anything, the scandal has made prosecutors employ a more cunning strategy. The authorities treated the evidence-tampering case as a rare crime committed by rogue individuals and did not address the underlying structural problems or carry out drastic reforms. Following the scandal, the Supreme Public Prosecutors’ Office said that it was important to “have the courage to go back on a decision” when there are doubts in their investigation, but there has been no backtracking by prosecutors in any major case since then.

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