Business / Corporate

Japanese judge rejects extra detention for Carlos Ghosn and Greg Kelly

Kyodo, Bloomberg

A court on Thursday rejected prosecutors’ request to extend the unusual detention of former Nissan Motor Co. Chairman Carlos Ghosn, boosting his chances of mounting a defense against claims that he understated his income.

The prosecutors appealed the Tokyo District Court’s decision, but it was also denied. Legal experts believe the court will most likely accept bail requests.

The Tokyo District Court also rejected a request to extend the detention of his aide Greg Kelly, it said in a statement Thursday.

The decision means both Ghosn and Kelly, who were arrested on Nov. 19, could soon be released from the Tokyo Detention Center — possibly Friday at the earliest — after spending a month in custody on suspicion of financial misconduct, with Ghosn’s lawyers saying they plan to apply for bail. The prosecutors, however, may decide to arrest him again on a different charge.

The prosecutors had sought a 10-day extension related to a separate warrant served to Ghosn on Dec. 10 for allegedly understating his remuneration by ¥4.2 billion in the automaker’s securities reports for the three business years through March this year.

The 64-year-old Ghosn was whisked away from his corporate jet upon landing in Tokyo on Nov. 19 and indicted three weeks later, while simultaneously being re-arrested for allegedly concealing income for another time period. Ghosn has denied wrongdoing.

The French-Brazilian — widely credited with saving Nissan from failure and bringing it together with Renault SA — stands accused of underreporting his income by tens of millions of dollars. The arrest has heightened tensions between Nissan and Renault, casting doubt over the viability of their alliance and highlighting the rift between the French and Japanese manufacturers over their respective powers within each others’ boardrooms.

If proven, Ghosn could face a prison term of 10 years. The formerly high-flying executive has also been accused by Nissan of misusing company funds, including to buy homes from Brazil to Lebanon.

In addition to Ghosn, both Nissan and former representative director Kelly, an American citizen, were indicted. Under the Japanese system, indictment allows prosecutors to lay formal charges.

Ghosn’s lawyers have said the charge that he helped himself by converting compensation to deferred pay is flawed because the compensation agreement wasn’t properly ratified, according to a statement by the office of Motonari Otsuru, Ghosn’s lawyer. Otsuru was former head of a special investigation task force at the Tokyo public prosecutor’s office.

Nissan’s board on Nov. 22 removed Ghosn from the post of chairman, as well as Kelly from his position. Nissan’s partner Renault has so far not removed Ghosn from the post of chief executive officer, but instead appointed an interim person to the role.

Disagreements within the world’s biggest automotive alliance, which was spearheaded by Ghosn, have all but exploded since his arrest. Renault’s most powerful shareholder, the French state, has stressed Ghosn should be considered innocent until proven guilty and demanded that Nissan share all evidence it has gathered.

Nissan CEO Hiroto Saikawa traveled to Amsterdam for a Dec. 18 meeting of the alliance comprising Nissan, Renault and 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 has emerged as a driving force in the investigation about the alleged wrongdoing by Ghosn and Kelly. Renault, Nissan’s largest shareholder and the company that bailed it out two decades back, has been pressing for specifics, as has the French government.

The arrests were the result of a coup by executives including Saikawa, said Kelly’s wife, Dee Kelly, in a video released Wednesday. Saikawa was asked 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.”

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