Ghosn's fight to prove innocence begins in Tokyo

TOKYO -- Carlos Ghosn, who served as chairman and CEO of the world’s biggest auto alliance, adds a new title to his resume: defendant.

Pre-trial hearings began Thursday at the Tokyo District Court’s 17th Criminal Court Division, kicking off a new phase in a saga that began in November when Ghosn was arrested just after landing at Haneda Airport on a private jet. Ghosn, wearing a grey suit, did not say anything before entering courthouse just before proceedings began at 10 a.m. in Tokyo.

His detention on allegations ranging from falsifying financial records to redirecting company money into his own accounts shocked the global auto industry. The alliance Ghosn created between Nissan, Renault and Mitsubishi Motors was shaken to its core.

In the half year since, the three-way partnership has moved on. New executives were brought in to restore profitability and navigate through an industry that is facing disruption from electrification, self-driving vehicles and new business models for transporting people and goods.

Ghosn, 65, is charting a different path, his energy focused on fighting for his freedom, proving his innocence and restoring his reputation. While Ghosn may be tempted to bring the same intensity and energy that he brought as "Le Cost Killer" to Nissan, it’s more likely that the pre-trial hearings and trial will be a drawn-out process with little drama.

"The format of argumentation is primarily on paper, not live," said Stephen Givens, a professor of law at Sophia University in Tokyo. "In the U.S., one of the skills that litigators need to have is to be able to think quickly on their feet. There’s very very little of that in Japan."

Ghosn is facing a total of four charges:

• Financial misconduct related to under-reporting of compensation and income during the fiscal years of 2010 to 2014.
• Financial misconduct related to under-reporting of compensation and income during the fiscal years of 2015 to 2017.
• Aggravated breach of trust for transactions that allegedly transferred 1.85 billion yen ($16.7 million) of Ghosn’s own personal investment losses to Nissan, and for transactions in Saudi Arabia totaling $14.7 million that were made from a Nissan unit to another account between June 2009 and March 2012, which allegedly inflicted damage on Nissan.
• Aggravated breach of trust related to transactions made in Oman, for allegedly moving $5 million from Nissan to a dealership and then into a company he controlled in Lebanon, with the money flowing into companies headed by Ghosn’s wife and son.

Prosecutors arrested Ghosn multiple times as they handed down the indictments. He was briefly freed on bail, arrested, and then released again, spending a total of 130 days in jail. The former auto executive has consistently denied the charges, describing them as "biased, taken out of context, twisted in a way to paint a personage of greed and a personage of dictatorship."

"I hope to be given a fair trial where the truth will come to light and I will be fully vindicated," Ghosn said in a statement issued after his second release on bail on April 25.

Nissan, which has also been charged on one count for allegedly understating Ghosn’s income, declined to comment on the judicial process. "The company’s focus is on stabilizing operations and strengthening its management structure, while addressing the weaknesses in governance that enabled this misconduct," said Nicholas Maxfield, a Nissan spokesman.

Legal strategy

Thursday’s hearing will focus on the two breach of trust charges, the Sankei newspaper reported, citing Hironaka. A hearing for the two charges for financial misconduct will be held June 24, the newspaper said.

The trial probably will not get underway until 2020, according to Hironaka. Between now and then, there will be several pre-trial hearings like the one on Thursday, most likely three or four for each set of indictments. The purpose of the pre-trial hearings, a new procedure enacted in 2005, is to narrow the scope of charges in order to streamline legal proceedings and speed up the trial.

"The pretrial hearing is so important that it can almost decide the outcome, because you have to decide whose testimony the court is going to hear and which piece of evidence the court will examine," said Hiroki Sasakura, a professor specializing in criminal procedure at Keio University Law School in Tokyo.

After the pretrial hearing, new evidence cannot be submitted, according to Japan’s code of criminal procedure. Judges can allow new evidence to be presented during the trial at their discretion. The pre-trial hearing process also gives the prosecution and defense an early look into each others’ potential strategy, as they make their case for what evidence to admit.

That process may take a while. Prosecutors have 120 Blu-Ray discs of audio-visual testimony, even as they continue to investigate and gather evidence, the Nikkei newspaper reported this week.

Three judges

Judges Kenji Shimozu, Kazunori Fukushima and Kenji Matsushita will preside over the proceedings, then issue a verdict. While the trial itself may be even as short as a year, the appeals process could drag out proceedings over several years.

The trial of Japanese internet executive Takafumi Horie on charges of fraudulent accounting lasted five years, including appeals, until he was sentenced to prison in 2011. The former CEO of Livedoor was released in 2013, and has since become an author, social-media maven and rocket industry entrepreneur.

Mark Karpeles, a central figure in the early days of Bitcoin embroiled in the 2014 collapse of Tokyo-based Mt. Gox, then the world’s biggest cryptocurrency exchange, was found guilty in March 2019 of tampering with records and given a suspended prison sentence.

Ghosn will be tried alongside Greg Kelly, who ran Nissan’s CEO office and was arrested on the same day as his former boss, Nov. 19. Kelly is facing fewer charges, and Ghosn’s lawyers sought to have him tried separately, a petition that the court denied. Kelly, 62, remains free on bail in Japan.

Two other Nissan executives worked closely with Ghosn and Kelly, but will not be facing trial. Toshiaki Onuma and Hari Nada struck plea-bargain agreements with prosecutors and cooperated with them before the arrests, according to Hironaka. They provided authorities with a "substantial amount of statements," the attorney said.

One question that the defense team says it will ask prosecutors is why Nissan CEO Hiroto Saikawa, Ghosn’s protege-turned-accuser, has not been charged with any crimes. Saikawa signed off on Ghosn’s retirement package, according to an outside corporate-governance panel.

For trials involving multiple charges that result in a guilty verdict, the sentences are not added together for each offense. Instead, the maximum prison term is capped at 1 1/2 times the longest possible punishment, according to Sasakura. The maximum fines can be added up. In Ghosn’s case, each of his charges carry a similar maximum sentence of 10 years and a 10 million yen fine.