UPDATE4: Tokyo prosecutors indict ex-Nissan boss Ghosn on fresh charges

Japan Economic Newswire |

Tokyo prosecutors charged former Nissan Motor Co. Chairman Carlos Ghosn with two additional counts of financial misconduct Friday, in a further blow to an auto industry executive who has remained in detention since his arrest in November.

Ghosn's lawyers requested bail at the Tokyo District Court following the indictments. But his chief lawyer has previously been pessimistic about the 64-year-old being released anytime soon from a detention center in the capital, partly because he is continuing to deny all the allegations.

Ghosn, credited with saving Nissan when it was teetering on the brink of bankruptcy in the late 1990s, was charged with aggravated breach of trust in relation to the alleged transfer of private investment losses to Nissan in 2008 and understating his remuneration in the three fiscal years through March last year.

He was initially indicted in December for underreporting his remuneration during the five years from fiscal 2010.

The prosecutors on Friday also indicted former Nissan representative director Greg Kelly and Nissan as a company for alleged misstatement of Ghosn's remuneration during the three-year period.

"We have judged that we can secure a guilty" verdict against Ghosn, said Shin Kukimoto, deputy head at the Tokyo District Public Prosecutors Office. He did not respond when asked whether Ghosn, who has been arrested three times, could be served with another arrest warrant.

It appears unlikely that Ghosn will be granted bail until his trial begins, which is expected to take at least six months, Ghosn's chief lawyer Motonari Otsuru said earlier, citing the complexity of a case involving documents in both Japanese and English.

A veteran judge also said that pretrial procedures, including narrowing down points of dispute, for Ghosn's case could take a year or more.

The arrest and detention of Ghosn, who remains CEO and chairman of Nissan's capital alliance partner Renault SA, has sparked international criticism of Japan's justice system, which effectively allows a suspect to be held indefinitely and questioned without a lawyer present.

The new charges came only days after Ghosn appeared at a Tokyo court seeking an explanation for his prolonged detention and declared his innocence. The open hearing on Tuesday, which drew worldwide attention, was his first public appearance since his arrest on .

Nissan said it has filed a criminal complaint against Ghosn with the prosecutors based on the same charge of breach of trust.

As for being indicted for the second time related to the underreporting of the former chairman's remuneration, the automaker said in a press release that it "takes this situation seriously and expresses its deepest regret for any concern caused to its stakeholders."

Nissan CEO Hiroto Saikawa told reporters later in the day that an ongoing internal probe into the alleged misconduct by Ghosn, who holds Brazilian, French and Lebanese nationality, will be conducted together with Renault.

Ghosn has remained in custody at the Tokyo Detention House since his arrest by prosecutors in November for allegedly understating his remuneration in Nissan's securities reports. The sum of remuneration that was allegedly underreported from fiscal 2010 totals around 9.1 billion yen ($83 million).

He was served with a fresh arrest warrant on for allegedly shifting a private currency swap contract with losses worth 1.85 billion yen to Nissan in and causing damage to the company by having it pay $14.7 million to a Saudi businessman, who guaranteed credit for Ghosn, in the following years.

Ghosn has admitted that the ownership of the contract was temporarily transferred from his private asset management firm to Nissan but said the automaker incurred no losses. The contract was transferred back to the management firm in after the Saudi businessman, Khaled Al-Juffali, guaranteed credit.

Ghosn has said that the payments to Al-Juffali through a Nissan subsidiary were proper compensation for him taking care of difficult business problems in the Middle East.

The prosecutors believe Ghosn committed an aggravated breach of trust the moment he transferred the contract to Nissan.

An individual convicted of aggravated breach of trust faces a fine of up to 10 million yen and/or a maximum prison term of 10 years. A violation of the financial instruments law by understating remuneration carries the same penalty for an individual, while a company faces a fine of up to 700 million yen.

Friday marked the last day of Ghosn's detention period approved by the Tokyo District Court and prosecutors had to decide whether to indict or release him.

Under Japan's Code of Criminal Procedure, prosecutors can continue holding an accused person in custody if they indict the suspect within the detention period following an arrest.

The duration of custody after indictment is in principle two months, but it can be renewed every month. Unless the defendant seeks bail, the detention is often renewed repeatedly.

Previous high-profile cases involving accusations of business misconduct in Japan suggest a defendant denying allegations is unlikely to be released on bail by a court. The court makes its decision based on the likelihood of the accused destroying evidence as well as prosecutors' opinion.

But Ghosn's close aide Kelly, 62, who was arrested along with the former chairman for allegedly understating remuneration, has been released on bail, while denying the allegations. He is said to be suffering from spinal stenosis.

According to Ghosn's defense counsel, Ghosn has had a high fever since Wednesday evening but his condition has improved.

==Kyodo

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