Editorial | Ghosn saga creates awkward questions for Japan

The flight of Carlos Ghosn, former head of the Nissan-Renault-Mitsubishi carmaking alliance, ahead of a trial for financial misconduct has all the elements of a corporate-crime thriller. How could the target of blanket electronic and manned surveillance while on bail slip under the radar to board a jet flight to freedom without help? Ghosn is now an international fugitive in Lebanon beyond the reach of Japanese law.

His escape is a dramatic turn in the saga of his arrest more than a year ago, against the background of his ultimate ambition to create an automotive behemoth capable of challenging Toyota and Volkswagen for global dominance, and resistance to his vision of a full merger between Nissan – a Japanese corporate flag-bearer – and Renault, which was seen to favour the latter. Ghosn claims to be the victim of a government-corporate conspiracy to remove him as Nissan chairman and prevent a fuller merger between Renault and Nissan.

Lebanon does not extradite its citizens, of which Ghosn is one by descent. Japanese justice officials and the Tokyo court that granted him bail now face embarrassing questions.

There are questions also for Japanese justice and corporate governance. In an email after his abscondment and the likely forfeit of US$14 million bail, Ghosn said he was escaping the “injustice and political persecution” of the Japanese judicial system. It may have been better if he had cleared his name in court. But some may feel a degree of empathy with his plight, since Japan’s judicial system has a 99 per cent conviction rate, achieved with scant regard for an accused person’s rights. Ghosn endured months of detention and interrogation without a lawyer present as he maintained his innocence. Evidence relating to lack of disclosure of and entitlement to compensation, among other charges, remains far from clear.

Though Ghosn was feted for having saved Nissan from the brink of bankruptcy through the Renault alliance, he made enemies with draconian cost-cutting and was accused of putting his global ambitions ahead of the divergent interests of the companies he ran. The question is whether his alleged financial transgressions in his corporate capacity are governance issues or the business of criminal prosecutors. Regardless, justice was never likely to be served amid the lack of corporate transparency and legal due process. The truth is more likely to emerge now that Ghosn and Nissan can each tell their own stories without those constraints. Such an outcome might not only give Ghosn a chance to salvage his reputation but also prompt Japan to reflect on whether its justice and corporate governance systems serve its best interests amid competitive globalisation.