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By the time he enters his second week in a Japanese prison, the charges underlying the terrible fall of former Nissan president, Carlos Ghosn, are beginning to emerge.
Although Nissan or the Japanese authorities have made public certain information relating to allegations of financial misconduct against Ghosn, arrested in Tokyo on November 19, the media reported the behavior of prosecutors. The Wall Street Journal reported Sunday that Ghosn told his colleagues that he did not need to inform the regulators of tens of millions of dollars in retirement benefits, which could light on a key element of the alleged violations.
Ghosn, who has made no public statements since his detention, denies having committed wrongdoing in connection with the allegations, the broadcaster NHK reported Sunday.
The French-Brazilian executive said it was acting appropriately by not including 8 billion yen ($ 71 million) of what is known as "deferred compensation" in regulatory documents from Nissan, reported the newspaper citing people close to Nissan's internal investigation into Ghosn's financial affairs. The Japanese rules on the declaration of the salaries of future leaders leave some room for interpretation, and this ambiguity could provide Ghosn with a line of defense against allegations of wrongdoing, the paper said.
Tokyo Prison
A charismatic globetrotter, architect of Nissan's global automotive alliance with Renault SA, Ghosn is now entering his second week in a Tokyo prison. It is subject to restrictions imposed by a criminal justice system that lacks many of the protections afforded to defendants in the United States. Europe . Prosecutors may detain him for about three weeks without charge and his lawyer will probably not be present during long and repetitive interrogations.
Prosecutors are almost certain to proceed with an indictment after making such a prestigious arrest, Nobuo Gohara, a lawyer and former finance attorney, told reporters on Monday.
"There is a point of no return that has been reached with regard to the prosecutor's office," said Gohara. In addition, plea bargaining in Japan is only allowed to incriminate others. It is therefore not possible for Ghosn to be able to admit wrongdoing in exchange for a lighter sentence.
The allegations against Ghosn include under-reporting of its income and misuse of the company's funds. Nissan has provided six residences in Ghosn, including Tokyo and New York, said Thursday a company official, asking not to be identified in private discussions. The automaker also hired his sister on a consulting contract, even though the role had no substance, said the manager.
Another member of the Nissan board, US citizen Greg Kelly, is also in detention. He held the position of Director Representative, a title that confers greater authority, and was a "brain" behind Ghosn's compensation agreements, Nissan Chief Executive Hiroto Saikawa said last week.
Pay rules
Nissan executive compensation decisions were significantly less overseen than in other large companies, in part because of Japanese rules that leave a lot of room for maneuver in determining how compensation is set.
The company's corporate governance report explains that "the chairman of the board", ie Mr. Ghosn, until his dismissal on Thursday, "determines the compensation of each director" without the participation of an independent advisory committee. This determination, the company said, is based on comparisons with other companies as well as consultations with the two representative directors, including Kelly. (The other is Saikawa).
"There are what I would call unusual provisions concentrating power on the president and the trustees' representatives, namely Ghosn," said Bruce Aronson, an expert in corporate governance and former law professor of the company. Hitotsubashi University, Tokyo. "You read news articles was a micro-manager and how he has ambaded power, but I'm a little surprised that they've officially adopted it into their governance system."
Ghosn is building a team of elite lawyers. In Tokyo, he hired Motonari Otsuru, a former director of the same department of the Tokyo prosecutor's office who is now investigating it, according to the newspaper Asahi Shimbun. In the United States, he hired Paul Weiss Rifkind Wharton & Garrison, a major Wall Street company that worked with clients such as Glencore and Steve Cohen, the billionaire founder of the SAC Capital hedge fund.
Based on the background of Japanese prosecutors, he will need it. Japan has one of the highest criminal conviction rates in the world and prosecutors generally attempt to use interrogations to extract confessions signed by the accused. If convicted, Ghosn could be sentenced to 10 years in prison, prosecutors said last week.
"Once you are charged, you are 99.9% likely to get a guilty verdict," Gohara said.
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