Complex Made Simple

Ghosn has 1% chance of escaping conviction, 10 years behind bars

Still under arrest since November 19 and facing another 20 days (with court approval) of additional detention, Carlos Ghosn, former Nissan, and Mitsubishi Motors Chairman, and ex-head of Renault might be looking at 10 years behind bars and has only a 1% chance of escaping this fate.

Not even today’s launch of the all-new Nissan LEAF NISMO RC, an electric race car with more than double the maximum power and torque output of its predecessor, could lessen the impact of the charges, which are piling up.

“The prosecutors’ decision to go ahead and indict Ghosn and former Nissan director Greg Kelly is an ominous development for the two men. More than 99% of people charged with a crime in Japan are eventually convicted,” according to experts telling CNN.

Read Nissan’s Carlos Ghosn fired: 450,000 employees at risk

The latest indictment

Carlos Ghosn and car maker Nissan, a company he saved from bankruptcy 20 years ago, were indicted Monday on allegations of under-reporting his income over a five-year period and new investigation are now open for a period stretching from 2015-2017 when the same practices were repeated.

“The two men are alleged to have collaborated to under-report Ghosn’s income in Nissan’s securities filings by about 5 billion yen ($44 million) over a five-year period ending in March 2015,” according to prosecutors telling CNN.

The maximum punishment in Japan for filing a false financial statement is up to 10 years in prison.

“Nissan takes this situation extremely seriously,” the company said in a statement. “Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company will continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information.”

CNN also reported that prosecutors are also arresting Ghosn and Kelly again as they investigate additional allegations that the two men under-reported Ghosn’s income by more than 4.2 billion yen ($38 million) between 2015 and 2017.

By rearresting them, the prosecutors will be able to detain them for questioning for even longer. After an arrest, they can hold a suspect for 72 hours without charging them with a crime. They can extend that by as much as 20 days with court approval.

Read: Nissan no stranger to scandals, now reeling from Ghosn’s misconduct

Nissan in trouble

When prosecutors also indicted Nissan for filing false financial statements, it meant other executives could have had knowledge of Ghosn’s misconduct or that the firm’s internal controls failed to spot the misreported income, according to the Guardian.

Said lawyer and former prosecutor, Nobuo Gohara: “Now suddenly the issue of (Nissan) CEO Saikawa becomes bigger. It becomes difficult to overlook Saikawa’s role in all of this. That becomes the main focus now.”

According to the Wall Street Journal (WSJ), Ghosn was planning to replace the company’s chief executive Saikawa at a board meeting in November, before Ghosn’s arrest in Tokyo last month, quoting people with knowledge of the matter.

“Saikawa has said the company was investigating possible misuse of corporate assets and other alleged wrongdoing by Ghosn for months this year and was supplying information to Tokyo prosecutors,” said WSJ.

“While that internal investigation was going on, Mr. Ghosn was growing increasingly dissatisfied with Saikawa’s handling of business problems at Nissan including a slowdown in U.S. sales and repeated quality issues in Japan,” people familiar with the matter told WSJ.

Saikawa has said that Ghosn had too much power within Nissan and its alliance with French carmaker Renault SA.

Ghosn owns a 43% stake in Nissan.

“Frictions between Renault and Nissan have risen in recent years. Some executives at Nissan, the larger and more profitable of the two, have expressed concern about Renault’s influence on Nissan’s business decisions,” said WSJ.

“Within Nissan, tensions before Ghosn’s arrest involved not only the future of the alliance but also Nissan’s own business struggles. Sales in the U.S. have declined year-over-year in six of the past eight months. Saikawa said Nissan needed to bolster U.S. profit margins, but initial efforts to get profits up by trimming spending on incentives caused sales to crater in April.”

Ghosn believed the alliance of Nissan, Renault and Mitsubishi Motors Corp. should seek to sell 14 million cars by 2022, up from 10.6 million last year.

Watch movie: Nissan’s 70 years of heritage in electric vehicles

Posh life to cramped cell

On Monday Ghosn was beginning his fourth week alone in a tiny cell at a Tokyo detention center, according to the Guardian.

“He has reportedly told embassy visitors he is being treated well but has complained of the cold and the rice-heavy diet. He spends his time reading books and news reports,” said the Guardian.

Kyodo news agency, citing investigative sources, reported that Ghosn said he had signed documents to defer part of his salary until after retirement. But he added that the amount did not need to be declared as it had yet to be definitively fixed.

“He is thought to have deferring part of his pay to avoid criticism of his high salary from employees and shareholders,” said the Guardian.