TOKYO—Who would want to take on a battle with only a 1-percent chance of winning? No one in their right mind would, but sometimes you don’t have a choice. Carlos “The Ghost” Ghosn, the former chairman of Nissan and the Nissan-Renault-Mitsubishi Alliance who is facing multiple criminal charges in Japan, has been in limbo and mostly in jail since his arrest last November. A number of legal experts and former prosecutors consider the charges spurious and his long detention unwarranted. But in high-profile cases, Japanese prosecutors and police routinely arrest, re-arrest, and indict non-cooperative suspects until they finally confess.
While Ghosn has been largely silenced by this process, Nissan and the prosecutors have been spoon-feeding stories to the Japanese press making him look guilty, greedy, and gluttonous. But slowly and carefully, behind the scenes, Ghosn and defense lawyer Motonari Otsuru, a former prosecutor from the same special investigative division that is now out to nail Ghosn, have been preparing a counterattack.
They are armed with two formidable weapons: love and poison. And on Jan. 8 they made their first move.
If they hope for real victory they have to let the prosecutors save face, and they not only have to win in the court itself, they need to win in the court of public opinion.
Japanese prosecutors drop roughly 50 percent of their criminal cases but once they indict someone, as they have now done with Ghosn, the conviction rate is 99 percent. Not-guilty verdicts are so rare that whenever they happen, it’s news. Prosecutors who suffer the humiliation of losing a case are demoted; judges who turn out not-guilty verdicts are sidelined. The system is stacked against the indicted.
This week we got a glimpse of how Ghosn and his wily lawyer Otsuru, who looks like a tired grey fox, might pull off the impossible.
It began with Otsuru doing something very rare—setting up a forum for Ghosn to speak in public on Jan. 8, thus giving him a chance to sway Japan’s media and public opinion. It was a brilliant move.
Japanese criminal justice procedure laws and Japan’s constitution stipulate that the accused has the right to demand an explanation of the reason he or she is being held without bail.
This was designed to prevent the rampant abuse of the pre-trial detention system, albeit without much effect. But in fiscal 2016 defense lawyers used that right in only in 0.6 percent of all such cases. Lawyers don’t do it because they know the judge always sides with the prosecution and will say the same thing: “There is reasonable fear that the suspect will escape or tamper with evidence.”
The Grey Fox, as a former prosecutor, knows all this. “Often the accused is kept in detention until their trial, even if it’s months away,” he said at his press conference. “That’s the ‘hostage justice system.’” He knew that asking for an explanation would probably be futile and change nothing. But he also knew that the judge usually grants the accused a maximum of 10 minutes to make a statement. And Ghosn was ready.
No one besides his lawyers and the prosecutors had seen Ghosn since he was arrested last November on the initial charges of under-reporting his income on company financial statements. It was like he vanished from the earth—as does anyone who is arrested and dropped into Japan’s legal dungeons.
It’s no wonder that among the Japanese press and some snarky employees at Nissan he was jokingly referred to as “Carlos The Ghost” after a few weeks. However, on Jan. 8—a mere 50 days later—the specter of a once-powerful chairman showed up in court, in the flesh. He has lost 20 pounds during his incarceration where he is given the same gruel as other detainees, denied pen and paper, and interrogated six to eight hours every day. (Mark Karpeles, the former CEO of Mt. Gox, had more or less the same experience)
Yet, like a real ghost, Carlos may have spooked the hell out of not only the prosecutors in Japan who desperately want to to win this case, but also Nissan executives.
In his 10-minute speech, the most striking thing he said wasn’t his insistence on his innocence, nor his systematic refutation of the charges against him. The most important part of his statement was a proclamation of love.
Ghosn talked about how he loves Nissan, the company he has devoted 20 years of his life to running—a company he brought back from the brink of collapse.
He hit the high note in his opening statement:
“First, let me say that I have a genuine love and appreciation for Nissan. I believe strongly that in all of my efforts on behalf of the company, I have acted honorably, legally, and with the knowledge and approval of the appropriate executives inside the company—with the sole purpose of supporting and strengthening Nissan, and helping to restore its place as one of Japan’s finest and most respected companies.”
And he ended on the same note, after explaining why he was not guilty of any crime:
“I have dedicated two decades of my life to reviving Nissan and building the Alliance [with French automaker Renault]. I worked toward these goals day and night, on the earth and in the air, standing shoulder to shoulder with hardworking Nissan employees around the globe to create value. The fruits of our labors have been extraordinary. We transformed Nissan, moving it from a position of a debt of 2 trillion yen in 1999 to cash of 1.8 trillion yen at the end of 2006... These accomplishments—secured alongside the peerless team of Nissan employees worldwide—are the greatest joy of my life, next to my family.”
You may be wondering, what was the point of all that?
Because in Japan it matters a lot. There’s a word here, aisha-seishin, literally “spirit of love for a company” that is considered a virtue, especially among older Japanese who remember what it was like to have a job for life. That was the mythical social contract we had: You gave your life for the company and the company took care of you until you died. His speech strikes a nostalgic chord for many.
When Ghosn declared his love for his company, colleagues and Nissan employees, he reminded everyone in Japan that he was once a hero in Japan. He also made the top executives of Nissan appear dishonorable, ungrateful, and sneaky.
When you consider that the top executives, led by CEO Hiroto Saikawa, went to the prosecutors, top members of the ruling Liberal Democratic Party, and practically begged them to put Ghosn in jail, you’d expect him to be angry. Instead, he spoke like a man who’d discovered his beloved wife had been cheating on him with his best friend.
It made Japanese people ask important questions: Why did Nissan executives go to the prosecutors? Why now? Who gains from his fall? What real damage did Ghosn do to the company, if any at all? Why did prosecutors go after him for breach of trust?
There are a plethora of more worthy targets. Takata Corporation executives overlooked and covered up defects in the airbags they produced that wound up killing people, and the resulting fall-out bankrupted the company. Yet Takata executives weren’t prosecuted in Japan for criminal negligence or breach of trust—even though their mismanagement destroyed their corporation.
Ghosn’s speech and the follow up press-conference by his defense team at the Foreign Correspondents Club of Japan was very effective. The mainstream media had been leaning towards acting like the prosecutors, presuming guilt until guilt was proven.
The next day, Tokyo Shimbun had on its front page "Ghosn, Former [Nissan] Chairman ‘Not Guilty’” and a detailed chart explaining where the prosecution’s claims were refuted effectively by the defense.
It also should be noted that the headline referred to him as the usual pejorative “Suspect Ghosn” but “Former Chairman Ghosn,” a subtle but important note of deference. This was followed by an editorial demanding Japan’s detention system be reformed. The evening paper Nikkan Gendai had a tabloid headline, “Special Prosecutor Case Collapses.”
There’s a Japanese saying, “Treat poison with poison,” that has a certain homeopathic truth across the board, especially in the criminal justice system.
For Ghosn, hiring a former special prosecutor was a brilliant move. The Grey Fox knows how the system works, including its flaws, its brutality, and what even he calls “hostage justice” because he availed himself of those powers during his heyday as a prosecutor. Otsuru was legendary for taking down politicians and for successfully prosecuting top executives of Nomura Securities for making illegal payment to Yakuza-backed racketeers. He left the prosecutors’ office in 2011.
The old fox may look sleepy when he speaks but he’s choosing every word carefully. His goal is to get Ghosn acquitted of the charges, not reform Japan’s criminal justice system, and this is why he carefully avoids any direct criticism of the system, or the prosecutors handling the case. He knows that his former disciples are still in the division. What he set out to do was pave a way for the prosecution to lose and yet still save face. If he wins in the court of public opinion, it might allow judges to rule not guilty without fearing banishment to courts on the outskirts of Japan.
Japan introduced plea bargaining last year and there have been many reports that Nissan executives made a deal with the prosecutors to supply intel on Ghosn in exchange for avoiding prosecution for their own dubious acts. Of course, such a transaction would slant the investigation. When I asked Otsuru if there had been such a plea bargain, he deftly answered, “I’m not aware of such an agreement at present but in pre-trial preparation I expect to find out.”
He did only two things that could be seen as critical of the prosecution. He noted, “Ghosn is accused of making illegal payments to a certain banker but the prosecutors never even spoke to the recipient of those payments before arresting Ghosn. This is unusual. I would hope that they would have investigated a bit more seriously.”
He also pointed out that the charges of breach of trust date back to 2008. “If Ghosn was Japanese, the statute of limitations on the so-called crime would have already passed. Because he has lived overseas, they say the charges are still valid.”
In the rest of his remarks he subtly questioned the timing of Ghosn’s arrest and the investigation. He wisely refused to enter into speculation on why Nissan executives involved the prosecutors in the first place.
It’s well-known that Ghosn was planning to put the French part of the Nissan alliance, Renault, in charge of the Alliance operations and that didn’t sit well with the Japanese executives. According to Nissan employees close to Ghosn, he was also planning to fire the Nissan CEO Saikawa, who preemptively collaborated with prosecutors to have Ghosn arrested.
Nissan employees have told The Daily Beast that Saikawa and other Japanese executives felt Ghosn had too much power for too long. They were tired of having to speak English, having to put up with the whims of foreigners, and resistant to the idea of essentially becoming a Western company. It was well known that Ghosn was going to change the company in a way the Japanese top executives did not like.
Otsuru, when asked if he thought the entire case was part of a coup d'état at Nissan, demurred by saying, “My job is to refute the charges and examine the evidence.” Yet, if you read between the lines of what he said, and that is a mystical art necessary for living in Japan, this is the message he conveyed: Well, obviously Nissan wanted to get rid of Ghosn. So they took the case to my colleagues but didn’t give them all the evidence and sadly, the prosecutors, fell for the story and didn’t double-check. So let’s just put all this embarrassment behind us and move on.
If the Grey Fox can paint a scenario where the prosecutors have been duped by corporate miscreants, he does allow them to lose with some grace. And by allowing the public to remember Ghosn as a hard-working salaryman, he’s also changed the storyline.
Ghosn, like many a CEO, probably abused his authority. He may have operated in a grey area and certainly the prosecutors will find more allegations to lob at him rather than lose face. On Jan. 11, as he once again became eligible for bail, the prosecutors indicted him on new charges — even though they have not bothered to talk with the alleged co-conspirators in the charges. New indictments make it easier to justify detaining him longer. An old Japanese proverb says, “If you shoot enough bullets, you’ll hit something.”
No one is walking away from this debacle with dignity fully intact. In France, the United States and even within Japan, many people are speaking out about the abuse of the detention system to force confessions. And here especially there is also something about this case that rubs many people the wrong way.
Former prosecutor Nobuo Gohara, who has been highly critical of the investigation from the start, spoke out about it in a recent essay. He notes that Ghosn, for all his faults, saved Nissan from bankruptcy and has been a hard-working CEO. He questions the motives of the disciples of Ghosn who normally would feel indebtedness to their mentor, not enmity, and who set him up to be arrested as soon as he arrived in Japan last November. He went from a private jet to solitary confinement. That’s quite a thing to do to your mentor.
“When we look at the so-called Ghosn/Nissan Case and we put aside the issues of whether or not there was actually a crime, or even whether [he has] legal responsibility [for any errors or misleading financial reports], we have to also look at this case from the aspect of these words:
We need to think about this case as something calling into question ‘the dignity of the Japanese people.’”
Or, at the very least, the dignity of the Japanese justice system.