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Lessons, implications of Ghosn case

The Yomiuri Shimbun

Yasuyuki Takai

The Yomiuri Shimbun On April 22, prosecutors brought another indictment against former Nissan Motor Co. Chairman Carlos Ghosn for aggravated breach of trust in violation of the Companies Law. Ghosn, 65, was charged with the suspected transfer of company funds for private purposes, involving a Nissan-affiliated dealership in Oman. What impact has the series of events — in which Ghosn was arrested and indicted several times by the Tokyo District Public Prosecutors Office over a period of about five months — had on the nation’s criminal justice system and corporate governance?

(From The Yomiuri Shimbun, April 23, 2019)

Plea bargaining fulfilled purpose

The investigation of Ghosn’s alleged aggravated breach of trust was conducted in difficult conditions. Many of the related incidents took place abroad and it was hard to obtain information from people acquainted with Ghosn in the Middle East, to whom Nissan funds are believed to have been transferred.

Although evidence directly substantiating the breach-of-trust charges against Ghosn must have been limited, in my view, the special investigation squad was able to indict him by collecting circumstantial evidence through detailed investigations.

What moved the investigation forward was Japan’s version of a plea bargaining system introduced in June last year. People, including some close to Ghosn, are said to have agreed to accept a deal, and that must have led the special investigation squad to obtain a lot of evidence supporting Ghosn’s alleged misconduct. The plea bargains in this case align with the original intent of the system, which is aimed at investigating crimes committed by organizational leaders. I believe that the public understands this kind of deal-making.

Ghosn’s case has gained a lot of attention overseas, and the repeated arrests and continued detention of Ghosn sparked criticism of a “hostage justice” system.

However, a request from public prosecutors to extend Ghosn’s detention for 10 days, in connection with his rearrest for understating his remuneration in securities reports, was dismissed on Dec. 20. He was released on bail on March 6 before the start of pretrial conference procedures, which serve to sort out issues of contention. In addition, the Tokyo District Court shortened by two days the period of his detention over the alleged aggravated breach of trust involving a Nissan-affiliated dealership in Oman.

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  • The Yomiuri Shimbun

    Wang Yunhai

These decisions were extremely unusual developments for the special investigations squad.

Nonetheless, the court decisions cannot be regarded as unreasonable. Ghosn’s release on bail at an early stage is understandable in light of the need to give him enough time to prepare for trial.

The aggravated breach of trust case involving a dealership in Oman is related to the alleged misuse of Nissan funds via the “Saudi Arabian route,” for which Ghosn had been indicted. In both cases, confidential Nissan funds called “CEO reserves” were said to have been transferred to these countries.

Courts are becoming stricter in making judgments regarding the need for the detention of suspects and defendants.

On the other hand, I do not think that the bail conditions for Ghosn were adequate. He opened a Twitter account while out on bail. It could put pressure on people related to the case, depending on the way he uses social networking services, and lead to the destruction of evidence.

The defense side has displayed an intention from the investigation stage to thoroughly fight the charges in court. It may take about a year to hold the first trial.

Prosecutors need to prove that the transfers of Nissan funds to Middle Eastern countries in the two breach of trust cases were made for Ghosn’s private purposes, not for appropriate corporate financing.

Regarding the case of the under-reporting of executive remuneration, the focus of the trial will be whether the court regards the remuneration in question, which Ghosn did not receive, as “payments that had already been decided.”

The key for the defense will be whether they can find evidence that points to inconsistencies in the prosecution’s argument through the disclosure of evidence, among other means. It will be also a crucial point whether the defense can identify discrepancies in the testimony of Nissan executives, expected to appear as witnesses for the prosecution.

The court proceedings are expected to be prolonged. Attention will be focused on how both the prosecution and the defense substantiate their claims and what kind of decisions the court will make.

This interview was conducted by Yomiuri Shimbun Staff Writer Shumpei Takeuchi.

■ Yasuyuki Takai / Former prosecutor with the special investigation squad of the Tokyo District Public Prosecutors Office

Takai, 71, was appointed as a public prosecutor in 1972 and took charge of the investigation into the Recruit stock-for-favors scandal in the late 1980s while with the Tokyo District Public Prosecutors Office’s special investigation squad. Takai left the prosecutors office in 1997 and became a certified attorney. He was involved in the criminal justice system reform that made audio and video recordings of questioning of suspects mandatory and introduced plea bargaining.

Bail system should be reviewed

The Ghosn case, which has attracted attention from overseas, highlighted anew the distinctive nature of Japan’s criminal justice system. While some criticism is based on misunderstanding, there are also more than a few things we should take heed of.

When Ghosn was arrested for the first time in November, the arrest itself invited a lot of criticism. This was prompted by differences in how Japan and Western nations deal with business-related cases. The underreporting of executive remuneration, for which Ghosn was arrested, is widely regarded in the United States and European nations as nothing more than a “violation of a formality.”

But the special investigation squad decided to arrest Ghosn, a well-known foreign corporate manager, without allowing any preferential treatment. People in the West must have viewed the move as an unfair practice because in those countries Ghosn was more likely to have just been questioned, without being arrested, for an alleged violation of a formality.

The criticism began to subside after suspicions grew in the following breach of trust case that Ghosn had misappropriated Nissan funds.

The detention period also has been criticized as too long, but the duration in Japan cannot be categorically said to be longer than those in the West. Although it is relatively short in the United States, detention in France for pretrial procedures before being formally indicted in business-related cases can last more than a year.

Nonetheless, it cannot be denied there are flaws in the Japanese system under international standards. In Japan, emphasis has for many years been put on the obtaining of confessions, and the presence of lawyers during the questioning process has been considered a hindrance to investigations.

In the United States and European countries, the presence of lawyers is guaranteed as a way to prevent coerced confessions. It is time to reexamine the system, as the emphasis in investigations has shifted from confessions to objective evidence, and plea bargains and other new means of gathering evidence have been introduced.

A review is also needed of the fact that bail is hard to obtain for a person who denies committing a crime. Courts now allow bail more proactively than before, but there is still a strong tendency to presume the possibility of the destruction of evidence when considering a bail application. Prosecutors and courts need to firmly acknowledge the principle that detention should be an exception used when it is unavoidable.

The introduction of a new system to grant bail more frequently while preventing a negative impact on investigations and trials also needs to be considered. Long-term detentions will decrease once a system is established to allow bail under certain forms of supervision through the use of wiretapping, or GPS tracking as in Western nations.

There is also a lack of awareness among prosecutors regarding accountability. Prosecutors have not explained much about the background of the cases. U.S. and European authorities in general proactively disclose information to justify their actions. Explanations provided regarding the justice system have also been insufficient, which contributed to the perception that spread among foreign media that the system is not transparent.

Japan’s criminal justice system excels in fairness and preciseness, which comes from its handling of people irrespective of social status and careful decisions regarding indictment and conviction based on close examination of evidence. Overall, human rights are well honored. The Japanese system will earn higher international trust if it reviews points to be improved, while providing more information about the system. The Ghosn case should serve as an opportunity for such changes.

This interview was conducted by Yomiuri Shimbun Staff Writer Katsuro Oda.

■ Wang Yunhai / Hitotsubashi University professor

An expert in comparative criminal law, Wang, 58, studies criminal justice systems around the world. Originally from China, Wang came to Japan in 1984 and earned a PhD from Hitotsubashi University. He studied U.S. judicial affairs among other subjects at Harvard University. He is well versed in international criminal justice. He took his current post at Hitotsubashi University in 2003.Speech

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