Auto titan Carlos Ghosn’s chances of getting out of jail were bolstered after a Japanese court refused a bid by prosecutors to extend his month-long detention, clearing the way for lawyers to seek his release on bail.
The Tokyo District Court on Dec. 20 dismissed an appeal by Japanese prosecutors to prolong the 64-year-old former Nissan Motor Co. chairman’s imprisonment. Lawyers for Ghosn, who was arrested Nov. 19 and later indicted for under-reporting his income at the carmaker, can now seek his freedom before the high-profile case goes on trial.
The investigators challenged an initial court decision against his release and lost. They may now appeal to the Supreme Court to keep Ghosn in custody for a further 10 days. Under Japanese rules, Ghosn’s lawyers can now request bail once prosecutors indict him again.
Speaking before the Dec. 20 court decision, Ghosn’s lawyers said they’ll apply for his release and if the request is approved, it was expected the car executive could be out as soon as Dec. 21. Ghosn wants to give a media conference if he makes bail and hopes the court will allow him to travel out of Japan, before returning for the trial—where he intends to plead not guilty, lawyer Motonari Otsuru told Bloomberg News.
The arrest of the high-flying executive has rocked the world’s biggest auto alliance, raising questions over whether the decades-long partnership between Nissan and Renault SA will survive his downfall.
Ghosn was indicted on Dec. 10 for understating his income from Nissan by 4.8 billion yen ($43 million) in the five years to March 2015. He was also re-arrested for understating compensation for a three-year period up to March this year. Since Ghosn’s arrest at a Tokyo airport, prosecutors have repeatedly extended his detention. On Dec. 20, the court also rejected an appeal to extend the detention of Ghosn aide Greg Kelly, who was arrested at the same time over his alleged role in helping the executive understate his pay.
Kelly’s lawyers were planning to file for bail Dec. 20-21, Kyodo reported. The court decision could impact the investigation, said Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, declining to comment on whether his office would appeal to a higher court to annul the district court’s order. Nissan, which dismissed Ghosn as chairman after accusing him of the pay violations and of using company money for personal use, declined to comment.
Ghosn would be free to talk to the media when released, Kukimoto said.
“The chances of bail are very high,” said Nobuo Gohara, a lawyer and former prosecutor in Japan. “To begin with, this isn’t a case that should need such a lengthy detention.”
Ghosn has been widely credited with saving Nissan from failure and bringing it together with Renault to create a formidable auto union. His arrest came after a months-long investigation by Nissan into his conduct and compensation that was largely kept from its French partner. That lack of transparency and concern Nissan will use Ghosn’s absence to push for more power within the alliance has heightened tensions between the two automakers.
If Ghosn gets bail, his movements are likely to be restricted to his home or a hotel, and he’ll need the permission of the court if he wishes to leave the country, legal experts have said. Japan’s prosecutors have faced criticism for a lack of clarity and communication on how they are handling the case, with Ghosn held in detention without charge for longer than would be permitted in the U.K. for a suspected terrorist.
If proven, Ghosn’s alleged offense may carry a sentence of as much as 10 years, prosecutors have said. He remains at the helm of Renault, which has demanded more information on his misdeeds from its alliance partner. Nissan has also accused Ghosn of misusing company funds, including over homes from Brazil to Lebanon.
Nissan and Kelly were indicted along with Ghosn on the misreported pay allegations. Under the Japanese system, indictment allows prosecutors to lay formal charges.
Much of the case seems to revolve around Ghosn deferring pay from Nissan until his retirement, compensation that was allegedly not reported by the carmaker. Ghosn’s lawyers have said the charge is flawed because the compensation agreement wasn’t properly ratified, according to a statement from the office of Otsuru, Ghosn’s lawyer. Otsuru is a former head of a special investigation task force of the Tokyo public prosecutor’s office.
Nissan’s board removed Ghosn from the post of chairman on Nov. 22 and ejected American citizen Kelly from his position as a representative director. Renault, which is the biggest shareholder in Nissan, has refrained from removing Ghosn from the post of chief executive officer, instead appointing an interim person to the role.
Ghosn was the mastermind behind the game-changing alliance and his arrest has seen disagreements between Nissan and Renault bubble to the surface. Renault’s most powerful shareholder, the French state, says Ghosn is presumed innocent until proven guilty and has demanded Nissan share the evidence it’s collated against him.
Nissan CEO Hiroto Saikawa traveled to Amsterdam for a Dec. 18 meeting of the alliance between Nissan, Renault and the third partner, Mitsubishi Motors Corp. While there, he had a one-on-one meeting with Renault interim chief Thierry Bollore that Saikawa described as “positive” and “productive,” according to Nissan.
Saikawa—a one-time protege of Ghosn—has emerged as a driving force in the carmaker’s investigation into the alleged wrongdoing by Ghosn and Kelly.
The arrests were the result of a coup by executives including Saikawa, Kelly’s wife, Dee Kelly, said in a video released Dec. 19.
Saikawa was asked by reporters on the day Ghosn and Kelly were arrested whether a coup was underway at Nissan. He replied: “That is not my understanding. I didn’t make such an explanation and think you should not think of it that way.”
By Ma Jie, Ichiro Suzuki & Kae Inoue