thursday, 4 april of 2019


Ghosn Rearrested on New Charges, Vows ´I Will Not Be Broken´

The drama surrounding fallen auto executive Carlos Ghosn erupted again, with Japanese prosecutors rearresting him on fresh allegations that he used millions of dollars from Nissan Motor Co. for his own purposes.

Authorities showed up at Ghosn’s Tokyo apartment shortly before 6 a.m. on Thursday to detain him on suspicion of aggravated breach of trust, using company money funneled through an intermediary for personal purposes, prosecutors said in a statement. They’re the most serious charges yet against Ghosn, who had been free on bail for less than a month.

"My arrest this morning is outrageous and arbitrary," Ghosn said in a statement. "It is part of another attempt by some individuals at Nissan to silence me by misleading the prosecutors. Why arrest me except to try to break me? I will not be broken."

Ghosn was arrested because of the risk of flight and destruction of evidence, Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, said at a briefing. Ghosn was released on March 6 on bail of 1 billion yen ($9 million) and on condition that he remain in Japan and be monitored.

The arrest happened a day after the former chairman of Nissan, Renault SA and Mitsubishi Motors Corp. announced he would hold a tell-all press conference next week. Renault and Nissan uncovered payments made under Ghosn that allegedly went toward corporate jets, a yacht and his son’s startup, leading the French carmaker to alert authorities about potential wrongdoing, people familiar with the matter have said.

Prosecutors took Ghosn’s phone, notebooks and other items in his possession as evidence, as well as his wife’s phone and passport, according his lawyer, Junichiro Hironaka. The rearrest was "extremely inappropriate" and designed to put pressure on his client, the attorney said, adding that prosecutors will probably seek to detain him longer.

'Questionable Practices'

On Wednesday, Renault said Ghosn had made questionable payments to a distributor in the Middle East and an outside lawyer. Some expenses "involve questionable and concealed practices and violations of the group’s ethical principles," the French carmaker said.

Another lengthy stay in prison could make it harder for Ghosn to prepare for his trial on charges of financial misconduct, and refocus international attention on Japan’s criminal justice system.

Ghosn, who was arrested Nov. 19 and jailed for more than 100 days, has vigorously denied accusations of transferring personal trading losses to the automaker and under-reporting his income. He was arrested just as he was preparing to tell his side of the story. The former auto executive had tweeted Wednesday that he planned to hold a news conference on April 11 to "tell the truth" about accusations against him. Anticipating such a move, Ghosn prepared a video statement, which will be released at some point, his lawyer Hironaka said.

"The way the prosecutors took him to question and rearrest was a bit rough,” said Koji Endo, an analyst at SBI Securities Co. “The rearrest seems like they wanted to block the news conference."

Middle East Payments
The Oman-related transactions were revealed in probes and amounted to millions of euros to companies in Oman and Lebanon that may have then been used for the personal benefit of Ghosn and his family, said the people, who asked not to be identified because the details aren’t public. Japanese prosecutors accused Ghosn of taking $15 million in three incidents beginning in 2015.

Investigations into the dealings started after Ghosn’s arrest in November in Tokyo.

The payments in Oman were to Suhail Bahwan Automobiles LLC, which is Nissan’s exclusive distributor in the sultanate, people with knowledge of the matter have said. The automaker first flagged the payments to Renault along with discounts on vehicles to Oman dealerships that the Japanese company suspected as being inflated, according to one of the people.

Other expenses of several million euros by RNBV, the Amsterdam-based company overseeing a partnership with Nissan, also raise concerns, Renault said. The latest findings may lead to legal action in France, after earlier transactions were brought to authorities, the company added.

Hironaka said he hasn’t discussed the reported Oman payments with his client, adding that he thought they were related to Thursday’s arrest.

A Paris-based spokeswoman for the Ghosn family denied any wrongdoing by Ghosn and said reports of Oman payments, use of the airplanes and the startup are part of a smear campaign to make the former executive look greedy.

The November arrest of the car titan destabilized a three-way alliance between Nissan, Renault and Mitsubishi. Then last month, the automakers announced a new governance structure designed for smoother and more equitable decision-making. Another re-arrest is unlikely to impact the manufacturers, but could put Nissan and Renault under closer scrutiny, because of their involvement in the payments.

Nissan declined to comment on the arrest, issuing its usual response regarding Ghosn. "Nissan’s internal investigation has uncovered substantial evidence of blatantly unethical conduct,” Nicholas Maxfield, a spokesman for the Yokohama-based automaker, wrote in an emailed statement. “Further discoveries related to Ghosn’s misconduct continue to emerge."

Under the Japanese legal process, prosecutors have 48 hours to detain suspects, after which they can make a 10-day detention request. That can be extended another 10 days by filing a second request to the court. Those procedures, along with additional arrests, can keep suspects in detention for months at a time.

"I am determined that the truth will come out," Ghosn said in his statement. “I am confident that if tried fairly, I will be vindicated."

10 Points about to rearrested

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, on Nov. 19 he was arrested in Japan and detained for months in a murky case involving his personal finances, as prosecutors levied charge after charge. Finally released on March 6, his bail of 1 billion yen ($9 million) was among the highest ever in Japan. Even then, a month later he was behind bars again facing new charges. As the legal drama unfolds, Ghosn’s alleged conduct isn’t the only thing under scrutiny. So is Japan’s legal system and its near-perfect conviction rate.

1. Why was Ghosn rearrested?
In Japan, it’s fairly common practice as prosecutors pursue an investigation. (Ghosn was arrested three times already before winning bail.) Authorities brought him back in on suspicion of aggravated breach of trust and using company money for personal purposes. The move came soon after Renault and Nissan were said to have uncovered payments that allegedly went toward corporate jets, a yacht and Ghosn’s son’s startup through intermediaries in the Middle East. Renault’s board said internal auditors found questionable expenses that “may amount to several million euros since 2010.” French authorities were alerted.

2. What was he charged with already?
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 the U.K. and being introduced across 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. He 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.” A day earlier the 65-year-old Ghosn announced on Twitter plans for a news conference.

A Paris-based spokeswoman for the Ghosn family denied any wrongdoing by Ghosn and said 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 lawyer at the time (Ghosn overhauled the team on Feb. 13) 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. On Feb. 20, Ghosn’s new lawyer, Junichiro Hironaka, blamed internal problems at Nissan for the arrest, without being specific.

4. Why the long lock-ups?
That’s not unusual in Japan, where suspects 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. 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 continued 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. When he was finally freed on his third try, he had to submit to what his family’s lawyer called “very intense surveillance” and restrictions on internet usage.

5. What are his prospects?
More time locked up. Under the Japanese legal process, prosecutors have 48 hours to detain suspects, after which they can make a 10-day detention request in court. That can be extended another 10 days if the court approves. An indictment is a sign that prosecutors intend to go to trial, which could be 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.

6. Has Ghosn been mistreated?
French President Emmanuel Macron told Japanese Prime Minister Shinzo Abe in January that he felt Ghosn’s detention was “too long and too hard.” When he was first jailed, Ghosn’s wife Carole 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. 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. While he was out on bail, he had restrictions on use of his mobile phone, could only use the computer at his lawyer’s office during business hours and had cameras monitoring the doors to his house.

7. 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. 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.

8. Is anyone else investigating Ghosn?
Nissan, which ousted Ghosn as chairman three days after his arrest, has 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 has said its internal probe was sparked by a whistle-blower. Smaller alliance partner Mitsubishi Motors Corp. also removed Ghosn as chairman in December. Renault and its most important shareholder, the French government, refused to follow for two months, citing the presumption of innocence. But on Jan. 23 Ghosn stepped down as chairman and chief executive of France’s largest carmaker.

9. 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’s lawyer Junichiro Hironaka has sought to have him tried separately from Nissan and Kelly.

10. How are others interpreting events?
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. Ghosn’s new lawyer has also suggested the arrest resulted from a conspiracy. Saikawa called such theories absurd. 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.

(Puhblished by Bloomberg, April 4, 2019)

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