The trials and tribulations of Carlos Ghosn in the Japanese justice system

Carlos Ghosn’s painful journey through the Japanese criminal justice system has been very much in the news. Ghosn, for many years a senior executive at both Renault and Nissan and a highly-regarded automobile industry leader, has suffered a precipitous fall from grace. He has been arrested twice by Japanese authorities – first, in November 2018, and again in April 2019 – and released on bail, after spending a considerable amount of time in pre-trial detention.

He has been charged with four sets of offenses under Japanese law, including alleged understatements of his compensation from Nissan and a failure to pay taxes on this compensation, as well as abuse of corporate authority whilst at Nissan. This was followed by allegations that he improperly diverted corporate resources to certain of Nissan’s corporate partners, in particular an Omani distributor of Nissan vehicles. Additional charges cover Ghosn’s alleged misuse of Nissan and Renault corporate resources to pay for his personal, rather than business-related, expenses, including dining, luxury goods, travel, and the purchase and refurbishment of residences.

The western media has covered various unusual aspects of the Ghosn saga, many of which stem from the remarkable harshness of the Japanese criminal justice system. These include such things as multi-hour/multi-day custodial interrogations of Ghosn by Japanese prosecutors without the presence of his lawyers, the seizure, during the April 4 search of his apartment in Tokyo, of his communications with his legal team, and the agreement, secured as a condition of his release from the second detention, that he would not meet with his wife without obtaining consent from Japanese courts.

While these are all concerning by western due process standards, there are even more troubling aspects of the Ghosn affair. Based upon Wall Street Journal reporting, it appears that Ghosn’s downfall was brought about by a combination of governmental and corporate intrigues, whatever his personal misgivings.

For many years, Ghosn had kept the Renault-Nissan alliance in a form that respected Japanese cultural and corporate sensitivities, and accorded substantial corporate independence to Nissan. Unfortunately, once President Emmanuel Macron took office, the French government began to press aggressively for a full and formal merger of Nissan with the French carmaker. The French government’s marching orders to Ghosn were to create a detailed merger roadmap to achieve this end by June 15, 2018. Ghosn succumbed to that pressure and began to pursue the path of a Renault-Nissan merger.

This development prompted first consternation, followed by anger, both among Nissan’s senior Japanese corporate executives, including several of Ghosn’s senior subordinates such as Hiroto Saikawa, Hari Nada, and Hitoshi Kawaguchi, and among senior officials at the Japanese Ministry of Economy, Trade, and Industry. The initial investigation of Ghosn arose out of this joint discontent and desire to stop the merger process, which Nissan’s executives have enthusiastically supported and assisted Japanese law enforcement authorities with.

The Wall Street Journal’s revelations about the governmental and corporate machinations that led to Ghosn’s downfall have not been denied either by the Japanese government or Nissan. Indeed, Ghosn’s successor at Nissan, Hiroto Saikawa, candidly described the whole sordid back story to Renault’s chairman, Jean-Dominique Senard, during a January 2019 meeting in Amsterdam. Japan’s official position is that the charges against Ghosn should be judged on their intrinsic merit and that the investigation’s genesis is irrelevant.

This position, however, is untenable as a matter of due process and actually further damages the Japanese government’s reputation. Ensuring impartiality throughout all stages of the investigative process, particularly when it comes to dealing with complex and nuanced matters of corporate governance, tax, and accounting, is of utmost importance. The Japanese government, on the other hand, was anxious to derail the prospects of a Renault-Nissan merger and keen to get rid of its perceived principal architect, Ghosn. The Japanese law enforcement authorities were clearly not objective and showed no shortage of interest either in commencing the investigation or in driving it forward.

In most western countries, particularly in the United States, such evidence of bias and ulterior motives on the part of investigators and prosecutors essentially dooms the prospects of conviction. American courts have used the so-called “shock the conscience” doctrine to explain why charges against defendants, no matter what their intrinsic merits might be, cannot be maintained in these circumstances. The government officials involved are also often disciplined and reprimanded. The fact that the Japanese authorities appear to be blissfully unaware of these legal and institutional imperatives is troubling.

Furthermore, the French government would be well advised not to accept the Japanese version of the Game of Thrones and rise to Ghosn’s defense.