The special investigation unit of the Tokyo District Public Prosecutors Office served a third arrest warrant on former Nissan Motors Co. Chairman Carlos Ghosn on Dec. 21, this time on suspicion of violating the Companies Act by shifting personal investment losses to the automaker. The surprise development emerged as international society kept an increasingly close watch on the case involving the world-renowned business leader.
Prior to the move, the special investigation unit tried to obtain court approval for extending the detention of Ghosn on suspicion of underreporting his executive remuneration from fiscal 2015 through 2017, in violation of the Financial Instruments and Exchange Act. The Tokyo District Court, however, turned down the request.
Following the court's decision, many expected Ghosn to be released on bail. The prosecutors apparently wanted to keep the businessman in custody, as it went ahead with serving the fresh warrant. There was no guarantee that Ghosn would remain in Japan should he be released, making his prosecution on aggravated breach of trust difficult. The prosecutors seemed to overcome this problem by taking the new action.
The alleged shifting of losses took place in 2008, when the world faced an economic meltdown triggered by the collapse of the Lehman Brothers investment bank. The move was intended to cover a loss of more than 1.8 billion yen. The Securities and Exchange Surveillance Commission is said to have pointed out the illegality of the transaction, which was then retracted.
According to the latest warrant, Ghosn is suspected of having more than 1.6 billion yen total wired into the account of an acquaintance from 2009 through 2012. One of the conditions of establishing a prosecution for aggravated breach of trust is whether a corporate executive in question has caused damage to their own company in order to make profit for themselves or a third party.
A focal point of the investigation will be whether the special investigation unit can prove that the 1.6 billion yen transfer is a private misappropriation.
The Ghosn case has been attracting a lot of international attention, including extensive coverage by foreign media outlets, much of it critical. The criticism has been focused on the Japanese criminal justice system, including the long detention period after arrest and barring a suspect's attorney from being present during questioning. With the third arrest warrant served to the former Nissan chairman, first arrested on Nov. 19, his detention will now be prolonged further.
The second arrest warrant served on Dec. 10 accused Ghosn of violating the Financial Instruments and Exchange Act, the same charge used in the first arrest. Dividing up the single case into two parts apparently left the overseas media with the impression that prosecutors were simply seeking ways to extend Ghosn's detention. Observers say the court denied the most recent extension request out of concern for such criticism.
The prosecution may face stronger headwinds over the latest arrest warrant, served right after the court decision. The special investigation unit should proceed with the understanding of the situation they are in.