TOKYO -- The newest charge against former Nissan Motor Chairman Carlos Ghosn in effect marks the end of Japanese prosecutors' investigation and looks to be the crux of the country's highest-profile corporate trial in years.
Prosecutors charged Ghosn with a second count of aggravated breach of trust Monday, alleging that $5 million in payments from Nissan to a distributor in Oman was funneled to a Lebanese investment company under the de facto management of the former auto alliance chief.
It marks the latest development in a case that has seen the once-globe-trotting executive arrested four times, and put back in detention just weeks after being released on bail in a disguise.
The earlier breach-of-trust charge involves payments to a Saudi associate, and Ghosn also faces securities law charges related to the alleged misreporting of his deferred compensation on company financial statements. Ghosn has denied all the charges, according to statements from the former executive and his defense team.
A lawyer and former prosecutor said that the Oman payments are the most important element in the case, in terms of the sums involved and the apparent intent.
"The point is whether there was an agreement to direct the funds back [to Ghosn] before Nissan made the payments," the lawyer said.
The payments were made from a discretionary fund that could be tapped by Ghosn, then Nissan's CEO, prosecutors say. According to a person familiar with the case, the money was managed by a United Arab Emirates subsidiary and intended for use in situations such as condolences for natural disasters.
But prosecutors say Ghosn directed payments to three Middle Eastern distributors, later labeling them as marketing expenses or other spending.
The Oman route was the biggest of these flows. Prosecutors allege the investment company that the money eventually went to was registered at the address of the office for a lawyer acquainted with Ghosn in Lebanon, where he spent his youth. The address was shared with around 40 businesses believed to be paper companies, one of which Ghosn is accused of using to buy and renovate a luxury apartment in Beirut.
A Nissan insider said that anyone who expressed reservations to Ghosn about the use of the CEO reserve was removed from their posts.
The Ghosn case has brought international attention to and criticism of how suspects are treated by Japan's criminal justice system, including lengthy pretrial detentions and lack of access to lawyers during questioning.
Against this backdrop, the Tokyo District Court made a number of decisions that went against prosecutors' usual playbook -- a rarity in cases involving the special investigations unit.
The court denied a request in December to extend Ghosn's detention after his rearrest on the compensation allegations. It also granted him bail last month before the start of pretrial proceedings. After his most recent arrest, the court authorized an eight-day extension of his detention, rather than the full 10 days sought by prosecutors.
"The court is probably mindful of public opinion overseas," a senior prosecutor complained. "It had a serious impact on the investigation."
But these decisions may reflect a broader trend. Supreme Court of Japan rulings in 2014 and 2015 made clear that courts should apply a stricter standard against the concerns about destruction of evidence that prosecutors usually invoke to keep suspects in custody. Defendants were released on bail in about 32% of cases in 2017, triple the 2003 rate.
Ghosn's release came with unusual conditions, including a ban on internet use and the installation of a security camera at his residence to track who goes in and out. Japan could employ broader use of new technology and methods, such as the GPS ankle monitors used overseas, to keep detention to a minimum.
Another change in Japan's legal structure -- a plea bargaining system introduced last June -- worked to the prosecution's benefit.
"It probably would've been difficult to build a case against Ghosn if we hadn't reached plea bargains with his former aides," a senior prosecutor said.
Wang Yunhai, a professor teaching comparative law at Hitotsubashi University in Tokyo, said Japanese courts need not adhere completely to Western standards.
"Japan's criminal justice system has positive traits, such as attention to detail, impartiality and adherence to norms," the professor said.
But Wang acknowledged problems, including the ban on defense lawyers being present during interrogations.
"This case should be used as an opportunity to keep working to improve" the system, he said.
