A Tokyo court on Tuesday rejected former Nissan Motor Co. boss Carlos Ghosn's request for bail after he was charged with additional counts of financial misconduct last week, continuing his detention since Nov. 19.
The lawyers for the 64-year-old former Nissan chairman are expected to appeal the decision by the court, which legal experts said appears to have judged that Ghosn may tamper with evidence if released.
Ghosn, credited with saving Nissan when it was teetering on the brink of bankruptcy in the late 1990s, has denied all allegations including understatement of remuneration in securities reports presented to Japanese regulators over eight years and transferring losses from a private investment contract to Nissan.
Ghosn's confinement at the Tokyo Detention House has already sparked criticism abroad over the possibility of his detention being legally prolonged indefinitely and the absence of lawyers during interrogations, a norm in Japan.
Legal experts said while the latest court decision appeared in line with current judgement standards in Japan, Ghosn's continuing detention was likely to rekindle criticism in U.S. and European media.
Carlos Ghosn's wife Carole has called on Human Rights Watch to shed light on what she describes as the harsh treatment he is facing under Japan's "draconian" justice system.
(Tokyo Detention House)
"Under Japan's 'hostage justice' system, prolonged detention to extract confessions is one of the prosecutors' primary investigative tactics," she said in the letter dated Dec. 28, according to her spokesperson.
Brad Adams, Asia Director at Human Rights Watch, wrote in The Diplomat, an online magazine focusing on Asia-Pacific foreign and security issues, that Ghosn has a right to a "prompt and fair bail hearing" and his case has "already shown that it is time to end Japan's hostage justice system."
Ghosn was initially accused of underreporting his remuneration in Nissan's securities reports presented to Japanese regulators during the five years through March 2015.
On Friday, he was also indicted for similar misconduct during the three years through March 2018 and for aggravated breach of trust in relation to the alleged transfer of private investment losses to Nissan amid the 2008 global financial crisis.
According to the written indictment, the former chairman stated that his remuneration was about 7.8 billion yen ($72 million) when it was actually around 17 billion yen during the eight years through March 2018.
As for the charge of aggravated breach of trust, Ghosn allegedly shifted a private currency swap contract with Tokyo-based Shinsei Bank that had an appraisal loss of 1.85 billion yen ($17 million) to Nissan.
He is also alleged to have caused damage to the company by having it pay $14.7 million to a Saudi businessman who guaranteed credit for Ghosn, with the money coming from Nissan's subsidiary in the Middle East.
On Friday, the detention period for Ghosn approved by the Tokyo District Court expired and prosecutors had to decide whether to indict or release him. His lawyers requested Ghosn's release on bail the same day.
A Japanese court in principle grants bail when there is no risk of a suspect fleeing or destroying evidence.
Ghosn's chief lawyer said at a press conference last week that his client could remain in detention for at least another six months until his trial begins due to the complexity of a case involving documents in both Japanese and English.
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.
But Ghosn's close aide Greg Kelly, 62, who was arrested along with the former chairman for allegedly understating remuneration, has been released on bail, while denying the allegations.
His lawyer said Friday that Kelly had since undergone surgery for spinal stenosis at a hospital in Ibaraki Prefecture and moved to a residence approved by the court.
The arrest of Ghosn came as an internal investigation by Nissan, triggered by a whistle-blower's report, found "significant acts of misconduct," including the understatement of remuneration and misuse of company funds and assets.
Sources close to the matter said Tuesday the automaker found during its ongoing probe that Ghosn, who holds Brazilian, French and Lebanese nationality, had asked Nissan to shoulder $1.5 million in costs to repair his home in Beirut, 65,000 euros ($74,000) in fees to fix a chandelier and $63,000 in membership fees for a yacht club.
Nissan is considering filing a damages suit over Ghosn's alleged misconduct, the sources said.
Nissan as a company has been indicted in relation to the understatement of Ghosn's remuneration.