A sign is displayed outside the Tokyo district court in Tokyo, Japan. (Photographer: Takaaki Iwabu/Bloomberg)

Japan Court Denies Carlos Ghosn’s Latest Bail Request

(Bloomberg) -- Carlos Ghosn’s latest bid to be released on bail was rejected by a Tokyo court, leaving the fallen car titan behind bars for at least another two months as prosecutors continue to build their case against him for financial crimes.

Ghosn’s lawyers had submitted the bail application last week after the former Nissan Motor Co. chairman was indicted for a second time, over allegations he transferred personal trading losses to the carmaker. Prosecutors have said his current period of detention lasts until March 10, but Ghosn’s chief lawyer, Motonari Otsuru, flagged last week that the executive could remain behind bars until his trial, which could be six months away.

Tuesday’s court decision is a win for the Japanese prosecutors pursuing Ghosn, who want to keep questioning him as they firm up their case ahead of an eventual trial. Ghosn’s lawyers said Tuesday they plan to appeal the decision.

Japan Court Denies Carlos Ghosn’s Latest Bail Request

Arrested Nov. 19 at a Tokyo airport, the car-industry legend has also been indicted for understating his income at Nissan by tens of millions of dollars. Ghosn’s downfall has rocked the world’s biggest auto alliance, with alleged misdeeds unearthed by the Japanese carmaker but kept from their French partner Renault SA forming the basis for the prosecutors’ case. While Nissan dismissed Ghosn as chairman shortly after his arrest, Renault has retained him as chairman and chief executive officer, saying it needs more evidence of his wrong-doing.

Health Fears

The time behind bars has already taken its toll on Ghosn. A citizen of three nations who traveled frequently between the alliance’s offices around the world, he appeared in public for the first time on Jan. 8 looking gray and gaunt, and was led into a court room handcuffed and with a rope tied around his waist. Ghosn’s wife, Carole, said this month that she fears for his health and that he’s been denied access to his family since the arrest.

It’s not uncommon in Japan for suspects to endure lengthy pre-trial detentions. Suspects are often re-arrested on suspicion of new charges periodically to keep them in custody while prosecutors attempt to build a case, and bail is the exception more than the rule.

Legal experts say this is all a strategy to secure a confession and make a trial easier. In Ghosn’s case, the judge at a Jan. 8 hearing said his continued detention was due to flight risk and the risk of witness or evidence tampering.

Losing Weight

Ghosn holds French, Lebanese and Brazilian passports and his children live in the U.S. His wife said that her husband is living in “harsh” conditions and enduring “unfair treatment,” and that authorities have not let the family speak with medical personnel at the detention center. He’s lost almost seven kilograms (15 pounds), she said.

In his court appearance, Ghosn gave a forceful rebuttal to the allegations against him, saying he has been wrongfully accused, is innocent and the accusations are merit-less. An indictment in Japan allows prosecutors to lay formal charges, a step that takes them close to trial. Since Ghosn’s initial arrest, prosecutors have repeatedly extended his detention and re-arrested him over new allegations.

Japan’s prosecutors have faced criticism for a lack of clarity and communication on how they are handling the case, with Ghosn held in detention without charge for longer than would be permitted in the U.K. for a suspected terrorist. If and when Ghosn will be out on bail, his movements are likely to be restricted to his home or a hotel, and he’ll need a court permission to leave the country, legal experts have said.

10 Years

If proven, each of Ghosn’s alleged offense may carry a sentence of as much as 10 years, prosecutors have said. Nissan has also accused Ghosn of misusing company funds, including over homes from Brazil to Lebanon and hiring his sister on an advisory contract. The prosecutors haven’t officially charged him over these allegations.

Click here for Ghosn’s prepared statement to the court from Jan. 8

At the court, Ghosn said his actions were backed by managers inside the company as well as external lawyers. For example, his retirement payments were reviewed by legal experts inside Nissan as well as independent lawyers, and showed no intention of breaking the law. Another accusation -- that he rolled personal investment losses onto Nissan -- came at no cost to the company, Ghosn said. All told, Ghosn said he always acted with integrity and had never been accused of any wrongdoing in his professional career.

Ghosn has been widely credited with saving Nissan from failure in the late 1990s and bringing it together with Renault. His arrest came after a months-long investigation by Nissan into his conduct, a probe that was largely kept from its French partner. That lack of transparency and concern that Nissan will use Ghosn’s absence to push for more power within the alliance has heightened tensions between the two automakers.

More Revelations

Nissan’s board removed Ghosn from the post of chairman on Nov. 22. Renault, which is the biggest shareholder in Nissan, has refrained from removing Ghosn, instead appointing interim replacements. Renault’s most powerful shareholder, the French state, says Ghosn is presumed innocent until proven guilty and has demanded Nissan share the evidence it’s collated against him.

Nissan CEO Hiroto Saikawa said Renault should reach the same conclusion as the Japanese automaker and oust Ghosn if and when it gains access to all the relevant information, according to an interview with French daily Les Echos published Monday.

Meanwhile, more revelations are trickling out about his lavish lifestyle. The newspaper on Tuesday cited documents showing Nissan paid for a $63,164 yacht club membership in Brazil and a 65,000-euro chandelier for a residence in Beirut that cost the company $16.7 million including renovations. Nissan has accused Ghosn of misusing company funds, including over homes from Brazil to Lebanon and hiring his sister on an advisory contract.

Nissan appears to be gaining support in the French media for its efforts to convince Renault to remove Ghosn from the helm. Les Echos, France Inter and Le Monde have all published recent columns urging Renault to make a decision on his future. An editorial in Le Monde advised Renault to dismiss the CEO.

Finance Minister Bruno Le Maire said Monday that France will only seek a permanent management change if Ghosn can no longer perform his duties.

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