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Nissan's Ghosn crisis

Ghosn insists he has been 'wrongly accused and unfairly detained'

'I am innocent,' ousted Nissan chairman protests in first court appearance

Former Nissan Chairman Carlos Ghosn is appearing at a hearing he requested, at which the prosecution must set out the reasons for his continued detention.

TOKYO -- Former Nissan Motor Chairman Carlos Ghosn denied the accusations against him at a court hearing on Tuesday in his first public appearance since his arrest on Nov. 19.

"I am an innocent of the accusations made against me," Ghosn said in a roughly 10-minute statement in English.

"I have been wrongly accused and unfairly detained based on meritless and unsubstantiated accusations," he said.

"Let me say that I have genuine love and appreciation for Nissan," Ghosn said.

He said he had "acted honorably, legally and with the knowledge and approval of the appropriate executives inside the company."

Ghosn, wearing a black suit, was led into the Tokyo District Court with his hands cuffed to a rope around his waist after having met his lawyer Motonari Otsuru for roughly 30 minutes. His hands were released as he sat down.

In reference to accusations of passing on to Nissan about 1.85 billion yen ($17 million) in personal losses from foreign exchange contracts, Ghosn argued that these currency hedges were related to Nissan's insistence that he be paid his salary in Japanese currency. He had entered into the contracts, backed by Nissan shares as collateral, to protect himself against currency movements, as his expenses were all in U.S. dollars.

He had asked the automaker to temporarily take on the collateral when the financial crisis in October 2008 led to a sharp drop in Nissan shares. The request, he said, had been "so long as it came to no cost to the company." The contracts were "then transferred back to me without Nissan incurring any loss," Ghosn said.

Former Nissan Chairman Carlos Ghosn insisted he had been "wrongly accused and unfairly detained" at his first court appearance since being arrested on Nov. 19. (Illustration by Hajime Hagiwara)

The executive is also accused of paying a Saudi acquaintance 1.6 billion yen in company funds. He asserted that Khaled Juffali was a "long-time supporter and partner" of the automaker who was "appropriately compensated" for "critical services that substantially benefited Nissan."

Ghosn also said he kept "a record of the market compensation" for his role, based on offers that he had been made to take the helm at other automakers, but this was done for his own reference and had no legal effect.

"I never received any compensation from Nissan that was not disclosed, nor did I ever enter into any binding contract with Nissan to be paid a fixed amount that was not disclosed," he said.

He closed his statement with an assertion of his commitment to Nissan, mentioning the improvement in financial results and the revival of key brands during his tenure, as well as the introduction of Mitsubishi Motors to the Renault-Nissan alliance.

The court last week approved prosecutor requests to keep Ghosn in custody until Jan. 11, prompting his legal team to request a hearing at which the prosecution must set out the reasons for his continued detention, a rarely exercised right provided under Article 34 of Japan's constitution.

The executive, who remains chief of Renault, has been arrested a total of three times since being detained initially on allegations of underreporting his compensation. He has also been accused of breach of trust over a scheme in which he allegedly transferred personal trading losses to Nissan.

His prolonged detention has brought renewed international scrutiny of Japan's criminal justice system, which lets prosecutors keep suspects in custody for extended periods and prohibits lawyers from being present during interrogations that can last several hours.

Ghosn's 24-year-old son, Anthony, recently told French weekly Journal du Dimanche that in the Japanese judicial system the defendant cannot have a complete vision of the documents of prosecutors, as they only "reveal little by little" the elements they possess.

Few defendants use the process Ghosn is employing as it tends to yield few legal benefits. Of the 104,529 detentions approved by the courts in fiscal 2017, the Article 34 provision had been tapped in just 583 cases, or 0.55%.

The detention period for the latest allegations will expire on Friday, when prosecutors must decide whether or not to pursue charges of aggravated breach of trust. Ghosn will then be allowed to apply for bail, but could also be rearrested on new allegations.

His first public appearance since his arrest comes at a time of growing tension between Nissan and alliance partner Renault over succession.

The Japanese automaker has dismissed a further request from Renault for an extraordinary shareholders meeting, Nikkei learned on Monday.

Members of the public line up to attend Ghosn's hearing at the Tokyo District Court in Tokyo on Jan. 8. (Photo by Kei Higuchi)

Nissan President and CEO Hiroto Saikawa sent a letter to Renault Deputy CEO Thierry Bollore saying such a meeting would be "unnecessary."

As Nissan's largest shareholder, Renault is eager to provide its input regarding the Japanese company's leadership, including in the selection of Ghosn's successor. Nissan's board rejected Renault's initial request on Dec. 14, saying it would wait for an expert panel's recommendations on improving corporate governance due by the end of March.

Renault owns 43.4% of Nissan, while Nissan has only a nonvoting 15% stake in its partner.

"While there is no need to change our capital relationship at the moment, I won't rule out the possibility in the future," Saikawa told reporters in Tokyo on Monday.

"We need to re-evaluate whether we can keep the status quo," he said, adding that the current leadership needs to address the issue before handing over the reins to the next generation.

Still, Saikawa said there would not be a major shift in the alliance, which also includes Mitsubishi Motors. "Nobody wants to do anything that would limit our synergies," he said.

Nikkei staff writers Yosuke Kurabe and Natsuki Yamamoto contributed to this story.

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