Ghosn case rattles foreign execs across Japan

Carlos Ghosn's prolonged detention shines the spotlight on Japan's legal system, which gives enormous power to prosecutors.
Carlos Ghosn's prolonged detention shines the spotlight on Japan's legal system, which gives enormous power to prosecutors.PHOTO: REUTERS

Expat business community fears falling foul of opaque and draconian legal system

TOKYO • Carlos Ghosn's prolonged detention under what critics see as Japan's opaque and draconian legal system has alarmed foreign executives and sparked questions over the country's ability to attract overseas talent.

Some in the expatriate business community believe the French-Brazilian-Lebanese tycoon, once revered as chairman of Nissan, has been the victim of unfair harshness because he is a foreigner.

"The way Ghosn is treated seems completely out of proportion compared to the way Japanese executives are treated," said one Tokyo-based French businessman, who asked not to be named.

This person pointed to a series of massive accounting scandals at Toshiba during which Japanese executives avoided criminal charges.

In contrast, Ghosn has languished in a Tokyo detention centre for more than 50 days as he fights a string of allegations of financial misconduct. The court has banned his family from visiting, allowing only contact with his lawyers and diplomats.

"It gives the impression of double standards, as if (Ghosn) was being treated this way because he is a foreigner. I do not see how they are going to attract qualified foreigners," the person told Agence France-Presse.

Ghosn had initially been held in a tiny room with Japanese-style tatami for sleeping - sparking outrage from abroad. He has since been moved to a larger room and has a Western-style bed, according to his lawyer Motonari Otsuru.


Mr Otsuru has dampened expectations that his client could be released any time soon, suggesting it could be six months until a trial is held, and stressing that bail is unlikely in such cases.

Many in Japan have voiced surprise that foreigners have criticised their legal system and prosecutors have reacted angrily, saying they are playing by the rules.

"This is a specific case," said Mr Seiji Nakata, head of Daiwa Securities. "I am in contact with foreign bosses and they have not voiced any pessimism on the subject."

But Ghosn dominates talk in expat business circles and while foreign investors are not yet rushing to leave Tokyo, the case has worried executives who fear they may unknowingly face legal troubles even if they think they are operating legally.

The case has "shone a strong spotlight on the opaqueness of Japan's prosecution system", said economist Martin Schulz at the Fujitsu Research Institute in Tokyo. "This certainly has a negative effect on the ability of companies to attract top talent to Japan," he added.

As the Ghosn case has laid bare, Japan's legal system gives enormous power to prosecutors, who nearly always secure guilty verdicts. Courts, meanwhile, routinely allow suspects to be held for questioning for lengthy periods.

Ghosn's case has also highlighted how the Japanese system differs from Western business norms, said corporate compliance lawyer Nobuo Gohara, also a former Tokyo prosecutor.

Mr Gohara noted that Nissan's sitting chief executive officer Hiroto Saikawa did not give Ghosn the opportunity to defend himself internally to the company's board.

Instead, the Nissan management conducted an internal probe, sided with prosecutors and swiftly sacked Ghosn after his arrest.

"If you were a manager with a very high salary in Japan - and because of your compensation, you might find yourself in a situation like that - I would imagine people with normal, common sense would not want to work in Japan," said Mr Gohara.


A version of this article appeared in the print edition of The Straits Times on January 11, 2019, with the headline 'Ghosn case rattles foreign execs across Japan'. Print Edition | Subscribe