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The Asia-Pacific Journal | Japan Focus Volume 18 | Issue 24 |
Number 2 | Article ID 5523 | Dec 15, 2020
1
Comparative Reflections on the Carlos Ghosn Case andJapanese
Criminal Justice
Bruce E. Aronson, David T. Johnson
Abstract: The arrest and prosecution of Nissanexecutive Carlos
Ghosn, together with hisdramatic flight from Japan, have
focusedunprecedented attention on Japan’s criminaljustice system.
This article employs comparisonwith the United States to examine
issues inJapanese criminal justice highlighted by theGhosn case.
The criminal charges andprocedures used in Ghosn’s case
illustrateseveral serious weaknesses in Japanesecriminal
justice—including the problems ofprolonged detention and
interrogation withouta de fense a t t o rney tha t have
beencharacterized as “hostage justice.” But incomparative
perspective, the criminal justicesystems in Japan and the U. S.
have somestriking similarities. Most notably, both systemsrely on
coercive means to obtain admissions ofguilt, and both systems have
high convictionrates. The American counterpart to Japan’s useof
high-pressure tactics to obtain confessions isa system of plea
bargaining in whichprosecutors use the threat of a large “trial
tax”(a longer sentence for defendants who insistupon their right to
a trial and are thenconvicted) to obtain guilty pleas. An
apples-to-apples comparison also indicates that Japan’s“99%
conviction rate” is not the extreme outlierthat it is often said to
be. Commentary onGhosn’s case emphasized the weaknesses inJapanese
criminal justice. Those weaknessesare real and important, but by
many criteria,such as crime and incarceration rates,
Japanoutperforms the U.S. As for Ghosn’s case inparticular, this
article explores four scenariosof what might have happened to him
if his casehad occurred in the U.S. It is not obvious that
he would have fared better under Americanlaw, nor is it obvious
that justice would havebeen better realized.
Key words: criminal justice, white-collarcrime, Japan, United
States, Carlos Ghosn,hostage justice, conviction rates,
confessions,plea bargaining
Carlos Ghosn in Detention in Japan
Introduction
The arrest and criminal prosecution of Nissanexecutive Carlos
Ghosn, together with hisdramatic flight from Japan, have
focusedunprecedented international attention onJapan’s criminal
justice system. The periodfrom Ghosn’s arrest in November 2018
until hispress conference in Lebanon in January 2020was filled with
a seemingly endless series ofcontroversies. Was Ghosn a greedy
autocrat or
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the victim of a coup by Nissan? Were Ghosn’sarrest and
prosecution justified? Were theconditions of his detention
acceptable or washe subject to undue pressure to force aconfession?
More generally, were the tools ofJapan’s criminal just ice system
usedappropriately against Ghosn, or were theyutilized to deprive
him of his rights as acriminal defendant? And are defendants’
rightsadequately protected in Japanese criminaljustice, or is the
system itself seriously flawed?
The controversy was fanned by Ghosn’s tacticsin response to his
sudden arrest and lengthypretrial detention and interrogation.
Followingthe failure of Ghosn’s first defense team toobtain his
release from prolonged detention(for details on Ghosn’s detention
and otherdevelopments of the case, see the timeline inAppendix 1),
Ghosn changed lawyers and wenton the offensive. He launched a broad
publicattack, amplified in the international media, onJapan’s
entire system of criminal justice, callingit “hostage justice”
(hitojichi shiho). Theresponse of Japan’s government often
consistedof formalistic citations of provisions in
Japan’sconstitution, rather than descriptions ofJapanese criminal
justice in practice oracknowledgement of real problems.
Thegovernment’s defense was combined withassertions that each
country should be able tochoose the system of criminal justice it
desires,with little mention of human rights.
The oversimplified arguments on both sideswere reflected in much
of the prolif iccommentary on Ghosn’s case. The Westernmedia was
generally sympathetic to Ghosn’scomplaints, while the Japanese
media mostlycondemned him and his actions. The caseclearly
highlights several difficulties in makingcomparisons between
criminal justice systems.Two of the problems are basic issues that
applyto comparisons with Japan generally, whileother concerns are
specific to the comparisonof criminal justice systems.
First is a basic principle of comparative study,that one should
not compare “my theory withyour practice.” Abstract theory always
looksbetter than the troubling realities of practice.In the Ghosn
case, there were numerousmisleading comparisons that broadly
idealizedthe rights of criminal defendants in the U.S. inways that
would surprise participants in theactual administration of American
criminaljustice. The value of comparative study lies inutilizing
knowledge of another country’s systemto shed light not only on that
country, but alsoon your own country’s system.
Second is the unfortunate tendency indiscussions of Japan to
resort to broad culturalgeneralizations and stereotypes. This is
true ofboth critics and defenders (foreign anddomestic) of Japanese
criminal justice. Criticsoften imply that the Japanese do not
fullyunderstand or appreciate the “Western” rightsof defendants due
to cultural reasons, whiledefenders sometimes respond that the
Japanesecriminal justice system is appropriate becauseit “fits”
with Japanese culture. But an“essent ia l ist” v iew of culture as
thedetermining factor in explaining legaldifferences often makes
comparison moredifficult (Nelken, 2010).
There are a lso problems spec i f ic tocomparisons of criminal
justice systems. First,criminal justice is largely a domestic field
ofstudy. Utilizing the state’s sovereign power todeprive
individuals of their liberty is a weightyprocess closely tied to a
host of domestic policyconsiderations. As a result, criminal
justiceexperts seldom make comparisons with othercountries’
systems, and comparative criminaljustice remains a limited field.
In addition,white collar crime and corporate crime areneglected in
most criminology journals,textbooks, scholarship, and teaching,
renderingmarginal what may well be the most seriouscrime problem of
our age (Johnson, 2018).
Second, civil and common law systems have
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different assumptions and procedures,particularly in criminal
cases. The criminaljust ice system in Japan began as
aninquisitorial system imported from Germany, inwhich defense
lawyers played a minor rolecompared to judges and prosecutors.
Postwarreforms from the U.S. resulted in a formalchangeover to a
more U.S.-style adversarialsystem, but in many respects the change
hasbeen incomplete.
Finally, there is a lack of common assumptions,definitions, and
data among countries withrespect to criminal justice. Common terms
suchas “arrest,” “trial,” and “conviction” havedifferent meanings
in different countries. As aresult, data on matters such as
“convictionrates” utilize different methods of calculationand may
not be readily comparable withoutsignificant qualification. Data
availability is alsoan issue. Japan’s centralized system
producesuniform data, while the U.S. has a complexfederal structure
with only fragmented data forthe large majority of cases that occur
at thestate and local levels. This makes it challengingto carry out
apples-to-apples comparisons.
Much of the commentary on the Ghosn casehas focused on
differences between criminaljustice systems in Japan and the U.S.
(see, forexample, Associated Press, 2018), but it is alsonecessary
to note broad similarities. In bothcountries the overwhelming
majority ofcriminal cases are cleared without trial, andconviction
rates in contested cases are high.The image of dramatic courtroom
battles doesnot represent the reality of how most cases
getprocessed.
Because the Ghosn case raises significantissues for Japan’s
criminal justice andcorporate governance systems, and
forcomparisons with Japan more generally, wedecided to combine our
areas of expertise totake a f resh look at th is case f rom
acomparative perspective that has been largelymissing to date. The
rest of this article
proceeds as follows. Section 2 provides generalbackground on the
Ghosn case. Section 3presents substantive and procedural aspects
ofthe case. Section 4 summarizes Ghosn’scriticisms of Japanese
criminal justice,compares the criminal justice systems in Japanand
the U.S., focusing on conviction rates andthe potential for
coercion, and presents severalscenarios for how Ghosn might have
beentreated if his case had occurred in the U.S. Ourfinal section
concludes by discussing thesignificance of the Ghosn case from
acomparative perspective.
Contexts of the Ghosn Case
Nissan and Toyota were the only twosignificant domestic
automobile manufacturersin prewar Japan (Morck and Nakamura,
2007).Nissan expanded globally following the SecondWorld War and
was the first Japanese carmanufacturer to penetrate the profitable
U.S.market (beginning in 1958) with a lineup ofsmall, efficient
cars and trucks and a famoussports coupe (Nissan Motor Corporation
GlobalWebsite, 2020).
Nissan fell upon hard times following thebursting of the
Japanese bubble economy in theearly 1990s. It incurred large losses
andaccumulated heavy debts. Like manycompanies in Japan, i t was in
need ofrestructuring but appeared reluctant to adoptthe necessary,
painful measures. This long-deteriorating situation became a
question ofsurvival in February 1999 when both majorcredit rating
agencies threatened to downgradeNissan’s rating from investment
grade to“junk” status, and it was unclear whetherNissan could
obtain the necessary funds for arestructuring (Milken and Fu,
2005).
Nissan took action the following month. Itfound a partner in the
French automobilecompany Renault. Renault and Nissan agreedto a
global alliance and signed an agreement on
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March 27, 1999, under which Renault injectedcapital and
purchased 37 percent (which laterbecame 43 percent) of Nissan
stock. Nissanowns 15% of Renault with no voting rights,while
Renault’s biggest shareholder is theFrench government.
The person designated to join Nissan as chiefoperating officer
and implement the necessaryreforms was Carlos Ghosn
(pronouncedGOHN). He speaks five languages and is acitizen of
France, Brazil, and Lebanon. Ghosnwas in charge of Renault’s own
restructuring inthe 1990s following its failed merger withVolvo,
and he seemed like a good candidate toreduce Nissan’s excess
capacity and cut costs,though there was also skepticism as to
whetherhe could succeed with an aggressiveturnaround plan that
seemed to violateconventional Japanese practices (Milken andFu,
2005, p. 125).
The turnaround plan was drastic by Japanesestandards. Five
Nissan plants were shut down.There was a reduction of 21,000
workers, or14% of the labor force, through a combinationof
attrition, hiring freezes, and layoffs. Thekeiretsu system
(businesses linked together bycross-shareholdings) was essentially
ended,with the number of parts suppliers reduced by50% and with an
estimated 20% savings inprocurement costs. Debts were also cut in
half,and a new performance-related compensationsystem for
executives was introduced (Milkenand Fu, 2005, pp. 131-133).
Many analysts agreed that the plan was a greatsuccess, as
profitability was restored withintwo years (one year ahead of
schedule), in oneof the most dramatic turnarounds in the historyof
corporate Japan. Ghosn received manyinternational and domestic
accolades. And hecontinued to rise in the companies’
respectivehierarchies, becoming CEO of Nissan in 2001and CEO of
Renault in 2005. He is the onlyperson in modern history to become
the head oftwo major corporations simultaneously. He also
became a famous figure in Japan, with over 50books written about
him and his businessexploits (he even became the hero of a
mangacomic series).
But Ghosn’s success at Nissan in the early2000s was not matched
by achievements in thefollowing decade, when Nissan’s
performanceand profitability were inconsistent (Boudette,2020). His
personal reputation took a hit in2010 due to the high level (at
least by Japanesestandards) of his executive compensation. Anew
rule in 2010 required that total individualcompensation for company
executives must bedisclosed if it exceeded 100 million yen(roughly
one million US dollars, utilizing anapproximate exchange rate of
100 yen perdollar) (Financial Services Agency, 2010).
Inanticipation of a strong negative reaction to thedisclosure of
Ghosn’s salary, Nissan cutGhosn’s disclosed compensation in half,
thoughhe apparently expected to eventually be paidthe “remaining”
amount after his formalretirement from Nissan. These facts would
laterlead to the prosecution of Ghosn for themisleading disclosure
of his compensation.
Although high by Japanese standards, Ghosn’sdisclosed
compensation was now relatively lowcompared to the heads of foreign
automobilecompanies. But Nissan continued to worry thatGhosn’s
compensation was too high, whileGhosn thought it was too low. It
was lateralleged that Ghosn added to his own benefitsthrough
personal use of company funds withoutfollowing proper procedures,
such as internalauthorization and disclosure.
During the 2010s, Ghosn’s authority at Nissanbecame more
concentrated. He had alwaysretained strong authority over the
governanceof Nissan, beyond the authority of a CEO at atraditional
Japanese company, due to thewishes of Renault (which was the
controllingshareholder). This included a delegation ofauthority
from Nissan’s board to set executiveand director compensation
(including his own)
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within a total budget (Securities and ExchangeCommission, 2019,
p. 1). His power was furtherstrengthened by practices at Nissan
that hadbecome entrenched over Ghosn’s nearly twodecades as its
head. Day-to-day control atNissan was delegated to a small group
ofexecutives with strong relationships withGhosn. It seems little
open discussion occurredon the board of directors that
Ghosndominated, and beginning in 2009 his aide,Greg Kelly, also
exercised extraordinarypowers on his behalf (Nissan Motor Co.
Ltd,2020, p. 8).
Two major factors contributing to corporategovernance weaknesses
at Nissan were thepresence of a controlling shareholder,
Renault,and the long period – nearly 20 years – ofexecutive control
exercised by Ghosn. Neitherof these factors is common in Japan or
the U.S.(for overviews of corporate governance inJapan, see
Aronson, Kozuka and Nottage, 2016;Aronson, 2019).
Renault and Ghosn continued to build up theirglobal automobile
alliance with the addition ofMitsubishi Motors in 2016. Nissan
became theowner of 34% of the shares of Mitsubishi, andGhosn became
chairman of all three companies(Ma and Horie, 2016). However,
businesssuccess continued to prove elusive. Profitabilitywas down
in the crucial North Americanmarket, and it once again seemed that
Renaultand Nissan were fa l l ing beh ind theinternational
competition, at a time whensignificant new investments were
required tobe competitive in emerging markets for electriccars and
self-driving automobiles. Ghosnformally resigned as president and
CEO ofNissan in April 2017, but retained his title aschairman and
apparently continued to functionas de facto CEO (Nissan Motor Co.
Ltd, 2020,p. 8).
One longstanding proposal favored by Renaultto address these
challenges was furtherintegration of the alliance companies,
which
could have included a complete mergerbetween Renault and Nissan.
But this idea wasopposed by executives at Nissan (Tanaka,2018).
Like the general public in Japan, theystill viewed Nissan as an
iconic Japanese carcompany. They chafed under the alliance’sfailure
to rebalance the share ownershipstructure between Nissan and
Renault despiteNissan producing substantially larger sales
andprofits than Renault.
In 2018, after Nissan received whistleblowerreports alleging
Ghosn’s misuse of companyfunds for personal purposes, the
companybegan an internal investigation withoutnotifying Ghosn
(Nissan Motor Co. Ltd, 2020).Based on the results of this
investigation, andfearing personal and corporate liability,
twoNissan employees (Nada Hari and OnumaToshiaki) went to
prosecutors to offer theircooperation in return for immunity
fromprosecution under Japan’s new plea bargaininglaw, which was
passed in 2018 (Jiji, 2019).Ghosn (and his aide Kelly) were then
arrestedwhen they arrived in Japan in November of thatyear to
attend a board meeting. By April 2019,Ghosn would be indicted on
four counts offinancial wrongdoing—two for false
informationdisclosures concerning his compensation, andtwo for the
personal misuse of company funds.
The Ghosn Case in Japan
The first two counts against Ghosn allegeviolations of
securities law, based on falsereporting of Ghosn’s compensation in
annualsecurities filings. The other two counts arebased on
aggravated breach of trust undercorporate law – a corporate crime
that iscommon in civil law jurisdictions (the mostfamous c r imina
l case on execut i vecompensation in Germany, relating toVodafone’s
hostile acquisition of Mannesmannin 2000, was based on a similar
provision ofGerman law; see Gevurtz, 2006, pp. 97-108)and would
likely fall under the broad mail and
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wire fraud provisions of U.S. federal law(Congressional Research
Service, 2019).Japanese prosecutors may have receivedrelatively
complete information about Nissan’sinternal investigation before
any charges werefiled, but they decided to charge Ghosn onecount at
a t ime. This is a common andcontroversial tactic in Japan, for it
enablesprosecutors to lengthen the period duringwhich an
uncooperative defendant remains indetention and thereby pressure a
defendantinto confessing. This is the main reason manycritics of
Japanese criminal justice call it asystem of “hostage justice”
(within Japan, seethe petition signed by 1010 legal
professionals;internationally, see the opinion concerningCarlos
Ghosn of the Working Group onArbitrary Detention, UN Human
RightsCouncil).
Substance
Count 1: False Entry in Annual SecuritiesReport, FY
2010-2014
The first two counts filed against the Nissancorporation, Ghosn,
and Kelly are based onJapan’s securities law. Securities law in
Japanwas closely modeled after U.S. law during theallied occupation
following the Second WorldWar. Article 24 of the Financial
Instrumentsand Exchange Act (Law No. 25 of 1948, asamended,“FIEA”)
makes it a crime to file anannual securities report that “contains
a falsestatement about a material particular or thatomits a
statement as to a material particularthat is required to be
stated.” Althoughinaccurate information disclosure might
beconsidered a “technical” crime not worthy of acriminal arrest,
Article 24 provides forsignificant criminal punishment for
violations:up to 10 years in prison, a fine up to 10 millionyen, or
both.
Confirmation letters concerning the accuracy ofannual reports
must be signed and sent to the
Tokyo Stock Exchange and Financial ServicesAgency by the
representatives of the company.Ghosn gave final internal approval
for thesereports (Securities and Exchange Commission,2019, p. 10)
and also signed and attested to theaccuracy of the securities
filings he is chargedwith violating.
As noted in the timeline appended to thisarticle, after Ghosn’s
arrest and detention onNovember 19, 2018, he was indicted on Count1
and then rearrested on Count 2 on December10, 2018.
Count 2: False Entry in Annual SecuritiesReport, FY
2015-2017
Japanese prosecutors charged the same threedefendants (Ghosn,
Kelly and Nissan) withcriminal violation of the same provision of
theFIEA for three additional fiscal years. It shouldbe noted that
the legal responsibility for filingannual securities reports
formally lies with thecorporation. Accordingly, the
prosecutors’inclusion of two individuals in their indictmentis
based on these individuals wrongfullywithholding information from
the corporationso as to make the corporation’s annualsecurities
filings false or misleading.
The major legal issue for these two counts iswhether or not
Nissan had a legal obligation topay Ghosn the compensation and
retirementbenefits that he expected to receive followinghis
retirement from Nissan. Ghosn allegedlyassigned Kelly the task of
finding a way tostructure payment to Ghosn of his
“postponed”compensation without disclosure. Severalschemes were
contemplated, includingpayment through a Dutch subsidiary,
butultimately it was decided that payment wouldbe made through
post-retirement “consultingfees” (Securities and Exchange
Commission,2019, pp. 2-3). Prosecutors have emphasized“secret”
documents held in Nissan’s secretarialoffice that allegedly prove
that future paymentsto Ghosn were guaranteed (Nikkei, 2018).Ghosn
and Kelly have claimed that Ghosn’s
https://www.hrw.org/news/2019/04/10/call-eliminate-japans-hostage-justice-system-japanese-legal-professionalshttps://www.ohchr.org/Documents/Issues/Detention/Opinions/Session88/A_HRC_WGAD_2020_59_Advance_Edited_Version.pdfhttps://www.ohchr.org/Documents/Issues/Detention/Opinions/Session88/A_HRC_WGAD_2020_59_Advance_Edited_Version.pdfhttps://www.ohchr.org/Documents/Issues/Detention/Opinions/Session88/A_HRC_WGAD_2020_59_Advance_Edited_Version.pdf
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“postponed” compensation was not fixed andthat post-retirement
compensation wasdiscussed only in the context of services thatGhosn
might provide to Nissan after hisretirement (Saiki and Konishi,
2018).
Count 3: Aggravated Breach of Trust: TheSaudi Arabia Route
Counts 3 and 4 both involve aggravated breachof trust under
Japan’s Companies Act (Law No.86 of 2005, as amended). Aggravated
breach oftrust is generally considered a more seriouscrime than the
two counts of false disclosurecited above. Under article 960 of
theCompanies Act, a director (or other individualdesignated under
this provision) who commits abreach of trust on behalf of his own
interest orthat of a third party and damages the companyfaces the
same punishment as for falsedisclosure (i.e., up to 10 years in
prison, a fineup to 10 million yen, or both). The elements ofthe
crime are (1) a violation of official duties,(2) an act done to
enrich himself or a thirdparty, and (3) conduct causing financial
harmto the company.
In general, the biggest issue in cases ofaggravated breach of
trust is the requirementof proof of criminal intent beyond a
reasonabledoubt. As in other countries, if the defendantfails to
confess proof of such intent mustdepend on circumstantial evidence.
Such proofof intent in complicated financial cases tends tomake
challenging cases for prosecutorseverywhere.
The “Saudi Arabia route,” which is the factualbasis for count 3,
is a complicated financialtransaction involving Ghosn’s entering
intocurrency swap contracts for investmentpurposes with Shinsei
Bank. When Ghosnincurred paper losses (1.85 billion yen or
18.5million dollars) following the 2008 financialcrisis and Shinsei
demanded additionalcollateral, Ghosn transferred the contract
toNissan. Nissan claims that it suffered a loss, forwhich Ghosn
reimbursed Nissan, but that the
details were never disclosed to Nissan’s board(Nissan Motor Co.,
Ltd., 2019, p. 9). Ghosnclaims that Nissan suffered no real
loss.
Ghosn then arranged for a separate creditguarantee of the
currency swap (3 billion yen)with his friend in Saudi Arabia,
Khaled Juffali,and Nissan returned the contract to Ghosn. It
isalleged that Ghosn used Nissan funds (from theCEO reserve fund)
to make payments totaling$14.7 million to Juffali’s company
during2009-2012, thus compensating his friend forhelping Ghosn with
a personal matter (Kurabe,Yamada and Yuzawa, 2018). Ghosn claims
thathis initial transfer of the contract to Nissan wasproperly
approved (by the board) and thatNissan suffered no loss. He also
claims that thepayments to Juffali were for a legitimatepurpose and
properly approved, with other topexecutives signing off, as
required, for use ofthe CEO reserve fund (Kyodo, 2019a).
Count 4: Aggravated Breach of Trust: TheOman Route
The factual allegations related to the “OmanRoute” are the most
damning allegationsagainst Ghosn by Japanese prosecutors, sincethey
clearly involve personal benefits to Ghosnand his family members
from Nissan funds.Ghosn is alleged to have again utilized the
CEOreserve fund, this time to have Nissan MiddleEast make $35
million in payments to SuhailBahwan Automobiles, a Nissan car
dealer inOman, during 2011-2018 (Kostov and McLain,2019).
An executive of the car dealership apparentlymade payments (1.7
billion yen or 17 milliondollars) in his personal capacity to an
entityeffectively controlled by Ghosn, which in turnmade payments
(560 million yen) to entitiescontrolled by Ghosn’s wife and
(partially) by hisson. When Renault (with Nissan)
eventuallylaunched its own investigation of Ghosn’sactivities, it
apparently shared information onthe Oman route with French
prosecutors, whoinitiated their own criminal investigation in
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February 2020, focusing on the Oman routeand 11 million euros in
questionable expenses(for personal entertainment, gifts and
legalfees, donations, use of jets, and housing) foundby Renault
(Associated Press, 2020; for detailsof the expense allegations see
Nissan MotorCo., Ltd., 2020, pp. 9-10). As of December2020, the
French investigation remains inprogress, and Ghosn has announced
thatFrench prosecutors will travel to Lebanon toquestion him in
2021 (Sebag and Patel, 2020).
Although counts 3 and 4 concerning thepersonal use of corporate
funds are moreserious than the allegations of
misleadingdisclosures, they are also more difficult forprosecutors
to prove. Not only do they involvecomplex financial transactions;
Japaneseprosecutors are also not well-equipped toobtain evidence
and witness cooperation fromsources in the Middle East. However, to
theextent that prosecutors had full access toNissan’s (including
Ghosn’s) emails and othercommunications, they may well be able to
builda persuasive case based on circumstantialevidence of Ghosn’s
intent.
Other allegations did not result in indictments.Nissan alleged
that Kelly underreported hisown compensation by a total of 626
million yen($6.26 million) from FY2012-2017 and alsoimproperly
received 7.17 million yen ($70,170)through manipulation of share
appreciationrights (Nissan Motor Co., Ltd., 2020, p. 11).Following
Nissan’s initial investigation, it waslater revealed that seven
directors and officersof Nissan received overcompensation
throughmanipulation of the exercise date of shareappreciation
rights (including Ghosn’ssuccessor as CEO, Saikawa Hiroto), but
thatthis was carried out by Kelly (to benefit Ghosnand Kelly)
without their cooperation (NissanMotor Co., Ltd., 2020, p. 11).
Prosecutorsdecided not to indict Saikawa, Ghosn’shandpicked
successor who reportedly signed adocument that promised to pay
Ghosn’s“postponed” compensation fol lowing
retirement, but then turned against him(Kyodo, 2019b). The
decision not to prosecuteSaikawa was later affirmed by a
ProsecutionReview Commission (kensatsu shinsakai), anindependent
committee of 11 citizens which isauthorized to review prosecutors’
non-chargedecisions (Jiji, 2020) – and which has broughtcharges in
other high-profile cases (Johnson,Fukurai, and Hirayama, 2020).
Ghosn’s defenseattorney criticized prosecutors’ disparatetreatment
of Ghosn and Saikawa, calling it“clear discrimination against
foreigners”(McLain, 2019). Saikawa resigned following thedisclosure
of his own overcompensation.
For its part, Nissan was fined 2.4 billion yen($24 million) for
underreporting compensationby Japan’s Financial Services Agency.
This wasthe second largest fine ever imposed by theagency. In
February 2020, Nissan filed a civillawsuit against Ghosn for 10
billion yen ($100million) in damages relating to Nissan’s
fines,Ghosn’s use of company funds for personalexpenses, and the
costs of the company’sinvestigation. In turn, Ghosn filed a civil
suitagainst Nissan and Mitsubishi Motor’s Dutchjoint venture
seeking 15 million euros forwrongful dismissal (Horie, 2020; Nissan
MotorCorporation, 2020).
Criminal Procedure
Japan’s most significant white collar crimecases involving
defendants such as nationalpoliticians and corporate executives are
usuallyhandled by the Special Investigation Division(“SID”)
(tokusobu) of the Tokyo District PublicProsecutors Office (SID
counterparts also existin Osaka and Nagoya). Many
high-profiledefendants, who typically face both theaggressive
methods of the SID and socialpressure to confess and cooperate
because oftheir association with a major corporation orpolitical
party, end up confessing, receivingsuspended sentences and doing no
prison timeafter conviction (see, for example, the
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suspended sentences of three corporateexecutives who pleaded
guilty in the $1.7billion Olympus accounting scandal;
Woodford,2012; Tabuchi 2013; Naito, 2019). In contrast,Ghosn’s case
illustrates what can happen whena defendant with vast resources who
is lesssubject to such social pressures challenges thestandard
operating procedures of white-collarcrime investigations in
Japan.
It was not obvious that Ghosn would pose sucha challenge when he
was arrested and detainedon November 19, 2018. He retained as his
maindefense counsel the ultimate “establishment”defense lawyer,
Otsuru Motonari, a formerhead of the SID in Tokyo. It appears
Ghosninitially hoped that by “playing by the rules” ofthe Japanese
system he could make anarrangement that would minimize both
hiscriminal exposure and the duration of hisdetention, but this
approach proved ineffective.
Ghosn’s case was not typical in other ways aswell, not least
because it attracted a great dealof international attention.
Prosecutors weresurprised by a decision of the Tokyo DistrictCourt
in December 2018 to refuse a 10-dayextension they had sought for
Ghosn’sdetention and interrogation. Althoughprosecutors’ requests
for extensions areroutinely approved, the court may have
beensensitive to the prominence of the case(Konishi, 2019). But
instead of agreeing toGhosn’s release, prosecutors filed count
3,which enabled them to keep him in detention.At Ghosn’s first
court appearance (January 8,2019, some seven weeks after his
initial arrest)he proclaimed his innocence. However, his
twosubsequent requests for bail were denied.
From Ghosn’s perspective, there did not seemto be any prospect
of a negotiated settlementor of release from detention, and the
judicialprocess seemed likely to drag on for manymonths. So Ghosn
changed tactics, replacinghis lead lawyer with a more aggressive
defensecounsel, Hironaka Junichiro, famously known
as the “The Razor,” and a bail specialist,Takano Takashi, who is
widely regarded as oneof the best criminal defense lawyers in
Japan(Johnson, 2017). The next month, in March2019, Ghosn’s
reconstituted defense teamsucceeded in obtaining his release on
bail (for10 billion yen or about $10 million), understrict
conditions. He had been detained for 108days. The legally
sanctioned period of pre-indictment detention is longer in Japan
than in32 other OECD nations (Croydon, 2016, p.4),and when police
and prosecutors make “serialarrests” (bekken taiho), as they did
with Ghosn,the total length of detention can be very longindeed
(Nicholas Johnson, 2019).
In April 2019, the day after Ghosn spoke outand announced he
would hold a pressconference, he was arrested again (for thefourth
time overall, despite having beenreleased on bail). A week after
the newdetention period started, Ghosn’s lawyersreleased a video in
which he alleged a “plot”and “conspiracy” against him. On April
25,following 22 days of detention, the TokyoDistrict Court released
Ghosn on bail of 5billion yen ($5 million) under strict
conditionsand despite the vehement objections ofprosecutors who
claimed that Ghosn was amajor flight risk (he is wealthy and has
fourpassports and many overseas connections).Ghosn’s bail
conditions included physicalsurveillance, video surveillance of the
entranceto his apartment, restrictions on his use ofcomputers, and
other measures. But they didnot include an ankle bracelet or
otherelectronic surveillance devices, which are notused in
Japan.
The prosecutors’ concerns proved prescient.On December 31, Ghosn
announced he had fledJapan for Lebanon. In an escape that
requiredmonths of preparation and considerable outsideassistance,
Ghosn evaded physical surveillance(on December 29, during the New
Year holidayseason), took a bullet train from Tokyo toOsaka, and
then was smuggled through an
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airport in Osaka (packed inside a musicequipment case) and onto
a private jet. The jetflew to Turkey, where Ghosn changed toanother
private jet that took him to Lebanon(Campbell et al., 2020).
At a press conference on January 8, 2020,Ghosn denounced his
treatment and renewedhis attack on Japanese criminal justice.
Hisillegal flight gave pause to some Western mediathat had
previously backed him, but theeditorial board of the Wall Street
Journalcontinued its full-throated support, calling hisstatement “a
tour de force of self-exoneration”in a case that “should have been
settled in theboardroom” (Wall Street Journal, 2020). Thesame
month, Interpol issued an arrest warrantfor Ghosn. As of this
writing in December 2020,he remains a fugitive from Japanese
criminaljustice, and he is also under criminalinvestigation in
France, while those who aidedhis escape have been arrested in the
U.S. andTurkey. As explained below, Ghosn settled withthe U.S.
Securities and Exchange Commission(“SEC”) by paying a $1 million
fine andagreeing to a 10-year ban on serving as anofficer or
director of a U.S. reporting company.
In Japan, Ghosn was subject to extensiveinterrogation while he
was in detention for 130days (see below for more details). Japanese
lawgives suspects and defendants the right toremain silent, but
judicial interpretation of thisright also imposes a duty to endure
questioning(Foote, 1991) – and without a defense lawyerpresent
(Ibusuki and Repeta, 2020). Hence,Ghosn was required to sit for
hours and days onend, while prosecutors asked questions towhich he
did not respond. And unlike manyJapanese defendants who refuse to
confess butdo engage with prosecutors’ questions (Ezoe,2010), Ghosn
maintained his silence. He did noteven provide a statement of his
own version ofthe facts. All of Ghosn’s interrogations
werevideotaped, and he was permitted to consultwith his lawyers on
a daily basis (outside theinterrogation room). There is no denying
that
his interrogations were long, and the conditionsof his detention
were certainly harsh – a smallcell, limits on activities outside
the cell, andstrictly limited meetings with family. But itappears
that the conditions of his confinementwere no worse (and no better)
than those forother criminal suspects who face seriouscharges in
Japan (Croydon, 2016).
Japan-US Comparisons
Ghosn’s (and his attorneys’) criticism ofJapanese criminal
justice consisted of four mainelements (see also Yamashita, 2020).
First washis argument that it is impossible to receive afair trial
in Japan because the system is“rigged” (Abdallah and Kelly, 2019).
On thisview, Japan’s “99 percent conviction rate” isoffered as
proof of fundamental unfairness inJapan’s criminal justice system
and as a validreason not to cooperate with the process. Whyrespect
Japanese procedures if it is impossibleto receive a fair trial?
Second, Ghosn excoriated Japan’s pretrialdetention practices. As
noted above,prosecutors (with cooperation from judges) candetain
suspects for long periods of time byutilizing the full 23-day
period of detention foreach count and by staggering arrests
andindictments for each count. Even after thesedetention periods
expire, prosecutors regularlypersuade courts to deny bail requests,
sodetentions in contested cases often continue formany months
thereafter (for examples, seeNaito, 2019). On this view, Japanese
criminaljustice has long had such low rates of releaseon bail that
it deserves to be called a system of“hostage justice” (Kyodo News,
2019c).
Ghosn’s third criticism was directed at criminalinterrogation.
As described above, suspects inJapan do not have the right to have
an attorneypresent during interrogation, and though theydo have a
right to remain silent, they arelegally required to attend
interrogations and to
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endure questioning, which can last many hourseach day. On this
view, Japanese criminaljustice is designed to force confessions,
evenfrom suspects who proclaim their innocence,and suspects who do
not readily confess will beput under increasingly intense
pressure(Dooley, 2019a).
Ghosn’s final criticism was political, that thecharges against
him were the result of a plot byNissan to prevent a merger with
Renault, andthat Japan’s government supported theconspiracy against
him. According to this view,political persecution and prosecution
justifyGhosn’s escape from Japan (Abdallah and Kelly,2019).
All of Ghosn’s criticisms were reported in themedia against a
backdrop of implicitcomparisons to systems of criminal justice
thatsupposedly safeguard defendants’ rights betterthan is the case
in Japan (see, for example,Associated Press, 2018). The favorite
point ofcomparison was the U.S., yet many of thosecomparisons were
based on faulty methods andidealized views of American criminal
justice. Asthe rest of this sect ion argues, moreappropriate
comparisons reveal that Japanesecriminal justice is not the outlier
portrayed byits critics (Wall Street Journal, 2020).
High Conviction Rates
The most common criticism of Japan’s criminaljustice system
focuses on its supposed “99percent conviction rate” (see, for
example,Truong, 2018). But definitions and practicesdiffer between
Japan and the U.S. Below weuse data from Japan and from the U.S.
federalsystem to compare criminal conviction rates incontested
cases.
In the U.S., the “conviction rate” usually refersto cases that
go to trial where defendants arefound guilty. Under American
criminalprocedure, defendants who plead guilty receive
no trial, which means that all of the cases thatgo to trial are
contested. In the federal system,about 84 percent of criminal cases
referred toprosecutors result in indictment (Motivans,2019, Table
4). The vast majority of these casesare disposed of through plea
bargaining – over97 percent at the federal level (Motivans,
2019,Table 6), and the percentage has beenincreasing for decades.
(In the 50 states theplea-bargaining rate is 94 percent; see
Neily,2019). Conversely, less than 3 percent offederal cases go to
trial in the U.S.
In Japan, by contrast, the majority of cases arecleared by
prosecutors through the exercise oftheir discretion to refrain from
bringingcharges. When cases are dropped orprosecution is
“suspended” (kiso yuyo), thesuspect is neither charged nor
punished.Overall, prosecutors in Japan decide to chargein less than
one-third of the cases that arereferred to them (Supreme Court of
Japan,2019, Graph 3). Moreover, about 90 percent ofcharged cases
involve confessions oradmissions of guilt. Although these cases do
goto trial, only the remaining 10 percent ofcharged cases are
contested at trial (SupremeCourt of Japan, 2019, Table 4). In
Japan, the“conviction rate” usually refers to thepercentage of all
cases that have been chargedand that result in conviction. We
stress: thevast majority of those cases are uncontested.
In order to make a meaningful comparison, weneed to focus on
conviction rates for similarlycontested trials. In the U.S. federal
system, theconviction rate for contested trials is about 83percent
(it is lower in some state and localjurisdictions) (Motivans, 2016,
Table 6). InJapan, the conviction rate for contested cases isabout
96 percent – not “more than 99 percent,”as is often claimed
(Supreme Court of Japan,2019, Table 4; see also Johnson, 2002,
ch.7). Inboth countries, therefore, the vast majority ofdefendants
who contest the charges againstthem do get convicted. On the other
hand,when we focus on acquittal rates, the U.S.-
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Japan difference is striking. In the U.S., theacquittal rate in
contested cases is 17 percent,while it is less than 4 percent in
Japan. Thus, anacquittal is four times more likely in Americathan
in Japan.
A third perspective provides additional insight.When we employ
the conventional Japanesemethod for calculating conviction rates –
as apercentage of all prosecuted cases, not justcontested cases –
we see great similarity inconviction rates. In fact, this method
results ina Japanese conviction rate of 99.8 percent(Supreme Court
of Japan, 2019, Table 4) and anAmerican conviction rate of 99.6
percent(Motivans, 2019, Table 4). Putting allprosecuted cases in
the denominator producesan extremely high conviction rate in
bothcountries. From this vantage point, a convictionrate of 99
percent may be interesting,troubling, or both, but it is not
uniquelyJapanese.
Pressure to Admit Guilt
Another striking similarity between Japan andthe U.S. concerns
the use of pressure toproduce admissions of guilt. In both
countries,protections for defendants on trial arerelatively robust,
but in the pretrial processmuch pressure is brought to bear on
suspectsto help the state obtain convictions.
In Japan, Ghosn was subject to extremely longinterrogations
while he was in detention for130 days. One of his defense lawyers
hasreleased records of the daily duration ofGhosn’s interrogations
during 70 of those days.The average length of interrogation was
7hours per day, and on several days Ghosn wasinterrogated for more
than 10 hours. As notedabove, Japanese law gives defendants the
rightto remain silent, but if they invoke it (as Ghosndid),
judicial interpretations also impose a dutyto endure questioning
(Foote, 1991) – andwithout a defense lawyer present (Ibusuki
and
Repeta, 2020). Hence, Ghosn was required tosit for hours on end,
day after day and weekafter week, while prosecutors asked
questionsto which he did not respond. Goto Sadato, aprominent
criminal defense lawyer in Osaka,has said that few criminal
defendants are ableto wi ths tand th i s k ind o f sus ta
inedinterrogation pressure without confessing.Many other Japanese
defense lawyers agreewith him.
Ghosn’s case is not unusual. Interrogations bypolice and
prosecutors are often long andarduous, averaging more than 21 hours
for allcriminal cases, and more than double that forthe serious
cases that are eligible for lay judgetrial (Homusho, 2012; see also
Keisatsucho,2012). In white-collar crime cases, the totallength of
interrogation often exceeds 100hours. By contrast, interrogations
in seriousfelony cases in the U.S. average just a fewhours in
length, and suspects who invoke theirMiranda rights cannot be
interrogated at all(Leo, 1996).
Interrogation in Japan has been the subject ofmuch good research
in English (Foote, 1991;Miyazawa, 1992; Foote, 1993; Takano,
2019).Recent reforms require the electronicrecording of
interrogations in a limited range ofcases, but even in those cases
“the problem ofthe overborne will” that has long plaguedcriminal
justice in Japan has not beeneliminated (Johnson, 2002, ch.8). In
the U.S.,pressure is routinely employed in pleabargaining, by
threatening to impose a large“trial tax” on defendants who have the
temerityto exercise their right to trial – and who thenget
convicted (Langbein, 1978; Fisher, 2003;B u r n s , 2 0 0 9 ; L y n
c h , 2 0 1 6 ) . M a n ycommentators either do not know about
thesize of trial penalties or deny their coerciveeffects, but some
observers are clear about thisAmerican problem (Rakoff, 2014). As
formerChief Judge William G. Young of the FederalDistrict Court of
Massachusetts put it in U.S. vRichard Green et al (2004):
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“Evidence of sentencing disparity [trial penalty]visited on
those who exercise their SixthAmendment right to trial by jury is
today stark,brutal, and incontrovertible. Today, under
theSentencing Guidelines regime with its vast shiftof power to the
Executive, that disparity haswidened to an incredible 500 percent
[thismeans the punishment after conviction at trialis five times
the punishment prosecutorsoffered in plea bargaining]…Not
surprisingly,such a disparity imposes an extraordinaryburden on the
free exercise of the right to anadjudication of guilt by one’s
peers. Criminaltrial rates in the United States and in thisDistrict
are plummeting due to the simple factthat today we punish
people—punish themseverely—simply for going to trial. It is
thesheerest sophistry to pretend otherwise.”
In sum, both Japan and the U.S. rely heavily onadmissions of
guilt, and the criminal justicesystems in both countries often use
high-pressure tactics to achieve that end. Bothsystems also fail to
provide adequate judicialoversight of the processes that are used
topressure defendants into helping the stateconvict (Foote, 2010;
Lynch, 2016). But there isan interesting difference too. While
manyinternational legal norms have been institutedto govern the
process of criminal interrogation,human rights instruments have
little to sayabout the high-pressure practices that makeplea
bargaining problematic in the U.S. and inother countries where
“trial waiver systems”are expanding (Fair Trials, 2016, pp.
60-69).This gap in international norms may helpexplain why so much
criticism was directed atGhosn’s interrogations while the
routineAmerican practice of imposing pressurethrough plea
bargaining seldom getsrecognized.
While there are significant similarities in ratesof conviction
and in the use of high-pressuretactics to obtain them, Japan and
the U.S. arecousins, not twins. Several significantdifferences
concern pretrial detention. In
Japan, there are no detention “hearings” inopen court. The
decision to allow pretrialdetention (which is the outcome in more
than95 percent of the cases requested byprosecutors) is made based
on review of a casefile that prosecutors send to a judge.
Thesuspect and his or her defense counsel have noright to review
the file, and they have littleopportunity to exercise meaningful
voice beforethe judge’s decision is made. The judge whomakes the
detention decision does not need toexplain it. The judge typically
asserts,perfunctorily, that detention is “necessary”because the
defendant presents a flight risk, acrime risk to the community, or
(most typically)a risk of tampering with case evidence, whichis
itself a crime (in Ghosn’s case, there wereallegations of witness
tampering by his wife;see Inoue, Yamamitsu, and Gall, 2020).
Thethree-judge panels who review defense appealsagainst pretrial
detention decisions do notexplain their reasons either.
There are also significant Japan-US differencesin the
prosecutor’s obligation to discloseevidence to the defense. In
Ghosn’s case, muchevidence was withheld from defense lawyers
–including evidence that might have helpedGhosn’s defense (Dooley,
2019b). In Ghosn’scase as in many others, Japan’s judicial
stancewas “don’t worry, you should trust theprosecutors”. It is an
old entreaty – and a weakone (Johnson, 2002, pp.272-273).
The contrasts with American criminal justiceare stark in other
ways as well. Most notably,suspects in Japan do not have the right
to havea defense lawyer present during interrogation.This is a
right in the U.S. (Leo, 2008), and sincethe European Court of Human
Rights Salduzjudgment in 2008, in much of the EuropeanUnion as
well, though this right has beenrestricted in several European
countries(Hodgson, 2020, p.177). In American pleabargaining, too,
defense lawyers are oftendeeply involved in negotiat ions
withprosecutors, especially in white-collar crime
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cases (see below). And once a suspect invokeshis or her right to
si lence in the U.S.,interrogations must cease. Another
Americancontrast concerns Japan’s slow pretrialprocedures. It was
reportedly the failure of apretrial conference (on December 25,
2019) tomove forward with a trial schedule (over a yearafter
Ghosn’s initial arrest) that promptedGhosn to activate his escape
plan (Campbell etal., 2020). In Japan, there is also less
respectfor the attorney-client relationship andattorney-client
privilege, as when Japaneseprosecutors carried out a
search-and-seizure inthe law office of Ghosn’s main attorney
inJanuary 2020 (Goto et al., 2020). These are allimportant
differences, and collectively theysuggest that some of Ghosn’s
criticisms ofJapanese criminal justice are valid.
What If?
Although speculative, it is instructive to discusssome scenarios
for how Ghosn might have beentreated if his case had occurred in
the U.S. Thefollowing four scenarios explore this question.
First, it is possible that allegations againstGhosn would not be
seriously investigated inthe U.S. No bankers from America’s topf
inancial f irms were charged for themalfeasance that led to the
2008 financialcollapse, and the problem of non-prosecution
ofwhite-collar crime extends far beyond finance.Over the past few
decades, corporate lobbying,trial losses, cultural shifts, and
other social andlegal forces have hindered the ability toprosecute
corporate executives in the U.S. AsJesse Eisinger, a Pulitzer
Prize-winningreporter at ProPublica has described, theprosecution
of white-collar crime in the U.S. isso routinely shirked and
avoided that federalprosecutors deserve to be called
“thechickenshit club” (Eisinger, 2017). Otherscholarly works reach
similar conclusions(Coleman, 2002; Garrett, 2014; Coffee,
2020;Taub, 2020).
In a second American scenario, Ghosn’sconduct would be
investigated, but he is notarrested because a capable defense
attorney isable to intervene at an early stage of thecriminal
process (which seldom occurs inJapan). By obtaining access to case
informationearly, and by shaping how that information isdisclosed
and interpreted, white-collar crimedefense lawyers in the U.S. are
often able toreframe legal arguments and avoid thedetention and
conviction of their clients – or atleast mitigate the consequences
of conviction.This shaping of facts early in the criminalprocess
“lies at the heart of successful defensework” in many American
white-collar crimecases (Mann, 1985), and it is more likely
tohappen in the U.S. than in Japan.
A third scenario is that the SEC initiates aninvestigation of
misleading disclosures underU.S. securities laws (Nissan’s
AmericanDepositary Receipts (ADRs), that are equivalentto shares,
are traded in the U.S.) and then filescivil charges against Ghosn.
Under thisscenario, Ghosn is not arrested and he probablysettles
with the SEC by paying a fine andagreeing to other sanctions. This,
in fact, washow Ghosn (and Greg Kelly and Nissan) wereactually
treated by the SEC. Ghosn settled bypaying a $1 million fine and
agreeing to a 10-year ban on serving as an officer or director ofa
U.S. reporting company. The two moreserious charges of misuse of
corporate funds,which had no direct connection to the U.S.,were not
considered in the SEC case – and thisis presumably why the SEC did
not refer theGhosn case to prosecutors for
criminalinvestigation.
Finally, the fourth scenario is that Americanprosecutors
investigate all of Ghosn’s allegedcrimes and indict him on much the
same countsthat Japanese prosecutors charged. In thiseventuality,
Ghosn would be arrested, and hemight be detained pretrial if
prosecutors couldestablish a clear flight risk, but he
otherwisewould likely be released on bail. On the advice
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of his defense attorney (who may be present atinterrogations),
Ghosn asserts his right toremain silent and interrogations end. If
he isfound guilty at trial, there is the potential for amuch longer
prison sentence in the U.S. than inJapan (perhaps 8 to 20 years).
Facing thelikelihood of a large trial tax if he does go totrial,
Ghosn might try to cut his losses bypleading guilty. Considering
the enormoussums of (alleged) undisclosed compensation($80 million)
and retirement benefits ($60million), an American plea bargain
could alsolead to a substantial term of imprisonment(perhaps 4 to 6
years).
In the fourth scenario, there would likely beconsiderable
pressure placed on Ghosn toreach a plea agreement with prosecutors
in theU.S. American prosecutors might also grantimmunity to other
Nissan offenders in order toobtain testimony against Ghosn – as
happenedin Ghosn’s case in Japan. In the U.S. suchgrants of
immunity often lead to miscarriagesof justice (Natapoff, 2011), and
in Japan, too,many observers worry about this risk under theplea-
bargaining law that took effect in 2018(Ibusuki, 2020; Ohno, 2020).
The pressure toplead guilty in the American system wouldcome from
the “system” (sentencing guidelinesand trial taxes), not just from
prosecutors, whomight “overcharge” Ghosn in order to increasetheir
own leverage in plea negotiations. IfGhosn resists this attempt at
let’s-make-a-deal(as he resisted pressure in Japan to
confess),American prosecutors could ratchet up thepressure, by
indicting or threatening to indictfamily members who allegedly
benefited fromhis misuse of corporate funds and who mayhave aided
Ghosn (his wife, Carole, wasindicted in Japan for perjury following
Ghosn’sflight to Lebanon, for allegedly making falsestatements
about her contacts with Ghosn’sassociates in the Mideast; Inoue,
Yamamitsuand Gall, 2020). In this scenario, it is not at allobvious
that Ghosn’s treatment in the U.S.would be better than his actual
treatment inJapan.
Conclusion
Although Ghosn has fled to Lebanon, heremains a lurking presence
in the trial of hisaide, Greg Kelly, which began in Tokyo
inSeptember 2020. The strength of theprosecutors’ case will
eventually be revealed incourt, at least with respect to the two
counts offalse information disclosure. Ironically, thedefense and
the prosecution seem to agree onthe basic facts of the case (both
Ghosn andNissan kept careful track of his remainingundisclosed
“compensation”), but they disagreeon the meaning of the facts and
on the intent ofthe parties involved. A criminal investigation
inFrance and a civil lawsuit filed by Nissanagainst Ghosn in
Yokohama are also ongoing.
Ghosn himself continues to proclaim hisinnocence. In September
2020 he announcedthat he would be coaching top executives at
aLebanese business school on how to “makeyourself invaluable” in a
company (Reuters,2020), and in November 2020 he filed a
formaldeclaration in a U.S. federal court supportingtwo Americans
(who aided his escape fromJapan) who are opposing their extradition
toJapan to stand trial, stating that they could face“human rights
abuses” by the Japanesegovernment (Yaffe-Bellany, 2020). Ghosn’s
ownrole in Nissan’s turnaround was significant, butit may have been
exaggerated because of themedia’s fondness for images of the “CEO
assuperstar.” His story is also a cautionary tale ofhow a CEO who
starts out being an effectivecompany leader may, over time, end up
beingsurrounded by yes-men and develop an attitudeof entitlement
that company assets are his ownresources.
Ghosn’s case illustrates several seriousweaknesses in Japanese
criminal justice--notonly the problems of prolonged detention
andinterrogation without attorneys that have beencharacterized as
“hostage justice,” but alsolesser known but important issues of
limitations
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on the role of defense attorneys, a lack ofjudicial transparency
and accountability, andfailures to disclose relevant evidence to
thedefense.
We should also view this case in perspective.The workings of
criminal justice systems areoften controversial, for they attempt
to achievea balance between many values that are intension, from
crime control and public safety topower control and individual
rights. There arealso significant gaps between the high idealsthat
underpin criminal justice systems and themessy realities of
criminal procedure inpractice. In the end, it is hard to call
Japan’scriminal justice system a “failure” (or the like)when the
country in which it operates has someof the lowest crime rates in
the world andrelatively few of the problems that afflictAmerica’s
“unusually cruel” system of criminaljustice (Howard, 2017) -- such
as the world’shighest incarceration rate (16 times higherthan
Japan’s) and harsh jail and prisonconditions, high rates of arrest
(more than 30percent of Americans are arrested at least onceby age
23) and of killings by police (threepersons a day, on the average,
compared toabout three a year in Japan), and large racialand class
disparities throughout the Americansystem (Garland, 2020).
Much of the commentary on Ghosn’s case hasrelied on implicit or
inapt comparisons and lazycaricatures. The impressions thereby
createdhave been simplistic and misleading. Japanesecriminal
justice has many weaknesses, but ifGhosn’s case had occurred in the
U.S., it is notobvious that he would have fared better, nor isit
clear that the interests of justice would havebeen better served.
The ultimate impact ofGhosn’s case remains uncertain – in Japan
andother countries, it is not over yet. We hope thatthe increased
attention it has stimulated willaid efforts to reform Japanese
criminal justice.We also hope it motivates sound
comparativeresearch about criminal justice practices andproblems in
Japan and the U.S.
Appendix – Timeline for the Carlos GhosnCase
May 2018 Internal investigation begins.Whistleblowers provide
specif icinformation about Ghosn’s personal useof corporate
funds—Nissan creates asmall internal investigation team
thatdiscovers suspicious use of funds.June 2018 Investigation team
goes toprosecutors. Investigation team consultswith lawyer (retired
prosecutor) and thenprov ides documents to Spec ia lInvestigation
Department of TokyoDistrict Prosecutors Office.Aug. 2018 Plea
bargain. Two seniorexecutives, Nada Hari and OnumaToshiaki agree to
cooperate withprosecutors.Nov . 19 , 2018 Ghosn and Ke l
lyseparately “lured” to Japan to attendboard meeting, arrested on
Count 1, andtaken to Tokyo Detention Center. At anews conference
that evening, Ghosn’ssuccessor as CEO, Saikawa Hiroto,accuses Ghosn
of wrongdoing andconcentrating too much power.Nov. 21, 2018 Tokyo
District Courtapproves prosecutors’ request forGhosn’s detention
for 10 days.Nov. 22, 2018 Nissan dismisses Ghosn aschairman and str
ips Kel ly of hisrepresentative-director role. MitsubishiMotors
ousts Ghosn as chairman on Nov.26. Renault names Thierry
Bolloreinterim CEO on Nov. 20, but Ghosnremains as formal chairman
and CEO ofRenault.Nov. 30, 2018 Tokyo District Courtapproves
prosecutors’ request for a 10-day extension of Ghosn’s
detention.Dec. 10, 2018 Ghosn indicted on Count 1and re-arrested on
Count 2. Kelly andNissan are also indicted.Dec. 11, 2018 Tokyo
District Court
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approves prosecutors’ request forGhosn’s detention for 10 days
based onCount 2.Dec. 20, 2018 Tokyo District Court(unusually)
refuses prosecutors’ requestfor a 10-day extension of
Ghosn’sdetention based on Count 2. Prosecutors’appeal is rejected
and the court’sdecision raises hopes of a quick releasefor
Ghosn.Dec. 21, 2018 Ghosn arrested again onCount 3. This is a more
serious crime. Itkeeps Ghosn in detention and ends anypossibility
of an early release.Dec. 23 Tokyo District Court
approvesprosecutors’ request for Ghosn’sdetention for 10 days based
on Count 3.Dec. 26, 2018 Kelly released on bail uponpayment of 70
million yen ($700,000) formedical reasons (must remain inapartment
in Tokyo).Dec. 31 Tokyo District Court approvesprosecutors’ request
for a 10-dayextension of Ghosn’s detention.Jan. 8, 2019 Ghosn’s f
irst courtappearance at his request concerningdetention and bail.
Ghosn declares hisinnocence. Judge states that Ghosn’scontinued
detention is necessary due toflight risk and the possibility he
couldconceal evidence.Jan. 11, 2019 Ghosn indicted on Count 2and
Count 3. Kelly and Nissan indictedon Count 2.Jan. 23, 2019 Ghosn
resigns as chairmanand CEO of Renault. The following dayRenault
appoints Jean-Dominique Senardas chairman and Thierry Bolloré as
CEO.Feb. 13, 2019 Ghosn changes lawyers.Ghosn replaces a retired
formerprosecutor, Otsuru Motonari (formerhead of the Special
InvestigationDepartment) with a more aggressivedefense team headed
by HironakaJunichiro, nicknamed “The Razor” and awell-known bail
specialist, TakanoTakashi.
March 6, 2019 Ghosn released on bail, inhis third attempt (the
first by his newlegal team). Ghosn is released uponpayment of
10-billion yen ($10 million)bail under strict conditions
includinghouse arrest. He famously leaves thedetention center
dressed as a manuallaborer. He was in detention for 108days.April
3, 2019 Ghosn speaks out. Ghosnopens Twitter account and
announcespress conference on April 11 to “tell thetruth.”April 4,
2019 Ghosn arrested for the 4thtime on Count 4. Ghosn is returned
toTokyo Detention Center.April 5, 2019 Tokyo District Courtapproves
prosecutors’ request forGhosn’s detention for 10 days.April 8, 2019
Ghosn removed as directorat extraordinary Nissan
shareholders’meeting. April 9, 2019 Ghosn video alleges “plot”and
“conspiracy.” Ghosn’s lawyersrelease video (made prior to his
mostrecent arrest on April 4) at ForeignCorrespondents’ Club of
Japan.April 12, 2019 Tokyo District Courtapproves prosecutors’
request forGhosn’s detention for 8 days from April15 based on Count
4.April 22, 2019 Ghosn indicted for Count4. Nissan announces it has
filed acriminal complaint with prosecutors overpayments to overseas
companies thatwere allegedly “directed by Ghosn for hispersonal
enrichment.”April 25, 2019 Ghosn released again onbail of 5 billion
yen ($5.0 million) withstrict conditions, including limitingcontact
with his wife. He was indetention for 22 days.April 26, 2019
Prosecutors decide not toindict Saikawa Hiroto, Ghosn’shandpicked
successor as Nissan’s CEO.The decision not to prosecute Saikawa
islater affirmed by a citizen’s review panel
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on Jan. 28, 2020. May 23, 2019 Pretrial conferenceprocedure
begins at Tokyo DistrictCourt. June 2019 French investigation.
Renaultinvestigation uncovers 11 million Eurosof questionable
expenses by Ghosn,mainly related to a
Netherlands-basedRenault-Nissan holding company. TheFrench state
opens its own investigation.Sept. 9, 2019 Saikawa’s resignation
asNissan’s CEO is announced immediatelyafter a board meeting.
Uchida Makoto(former head of Nissan’s joint venture inChina)
becomes new CEO of Nissan onDec . 1 , 2019. At h i s f i r s t
pressconference he says changes are neededin the
Renault-Nissan-Mitsubishi allianceto spur sales and earnings.Dec.
31, 2019 Email announcement fromGhosn that he fled Japan and is
inLebanon. Forfeits combined bail of 1.5billion yen ($15.0
million).Jan. 2, 2020 Interpol arrest warrant forGhosn. Lebanon
receives arrest warrantand Turkey begins investigation intoillegal
chartering of plane.Jan. 7, 2020 Arrest warrant issued forGhosn’s
wife. Japanese prosecutorsallege Ghosn’s wife committed
perjury.Jan. 8 , 2020 Ghosn holds pressconference in Lebanon.Jan.
29, 2020 Prosecutors conduct asearch and seizure at the law office
ofGhosn’s lawyer, Hironaka.Feb. 12, 2020 Nissan files a civil
lawsuitin Japan (Yokohama District Court)against Ghosn for 10
billion yen ($100million) in damages relating to Nissan’sfines,
Ghosn’s use of company funds forpersonal expenses and the costs
ofinvestigation.Feb. 19, 2020 French prosecutorsannounce they have
opened a criminalinvestigation concerning Count 4 (theOman route)
and 11 million Euros ofquestionable expenses cited in the 2019
Renault investigation. Feb. 29, 2020 Japan’s Financial
ServicesAgency finalizes and issues an order toNissan to pay a fine
of 2.4 billion yen($24 million) for underreporting thecompensation
of Ghosn and otherexecutives.May 21, 2020 Michael Taylor and
PeterTaylor, who assisted in Ghosn’s escapef r o m J a p a n , a r
e a r r e s t e d i nMassachusetts at the request of theJapanese
government.Sept. 15, 2020 Trial of Greg Kelly beginsin Tokyo
concerning Count 1 and Count2. Kelly pleads not guilty. Sept. 27,
2020 Ghosn announces his planto launch a management and
businesstraining program at the Universite Saint-Esprit de Kaslik
(USEK), a privateuniversity near Beruit, stating that “Therole
model is my experience, what I thinkare the basic needs of a top
executive ina very competitive environment.” Nov. 10, 2020 Ghosn
intervenes inextradition case of Michael and PeterTaylor. Fi les
formal declarationsupporting their opposition to extraditionto
Japan, stating that the Taylors couldface “human rights abuses” by
theJapanese government.Nov. 11, 2020 First hearing held inYokohama
District Court in Nissan’s civillawsuit against Ghosn.Nov. 20, 2020
The U.N. Human RightsCouncil’s Working Group on ArbitraryDetention,
an independent panel ofexperts, issues a nonbinding opinion
thatGhosn’s detention in Japan was arbitrary.It recommends that
Ghosn be awarded aright of compensation as a remedy. Itdoes not
address the merits of thesubstantive charges. The
Japanesegovernment rejects the opinion.
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Bruce E. Aronson is Resident Affiliated Scholar, U.S.-Asia Law
Institute, New YorkUniversity School of Law ([email protected]). His
main area of research is comparativecorporate governance with a
focus on Japan. Recent publications include CorporateGovernance in
Asia: A Comparative Approach (with J. Kim, eds., Cambridge
University Press,2019).
David T. Johnson is Professor of Sociology at the University of
Hawaii at Manoa([email protected]). He is the author of many
works on criminal justice in Japan, includingThe Culture of Capital
Punishment in Japan (Palgrave, 2020), which is available by
openaccess.
https://apjjf.org/mailto:[email protected]://www.amazon.com/Corporate-Governance-Asia-Comparative-Approach/dp/110842077X/?tag=theasipacjo0b-20https://www.amazon.com/Corporate-Governance-Asia-Comparative-Approach/dp/110842077X/?tag=theasipacjo0b-20https://apjjf.org/mailto:[email protected]://www.palgrave.com/gp/book/9783030320850