The arrest and continued detention of Carlos Ghosn, the former leader of the car-making alliance that included Nissan, Mitsubishi and Renault, highlights how differently criminal-justice systems treat defendants.
Carlos Ghosn, the former leader of the car-making alliance that included Nissan, Mitsubishi and Renault, has been detained in Tokyo since Nov. 19 on suspicion of understating his salary for eight years. He would be in a very different situation if he were in the United States.
Indeed, the arrest and continued detention of Ghosn highlights how differently criminal-justice systems treat defendants. It is unlikely that he would be accused of a crime for what he did if he were in the United States — and even if he were, he would have been released from custody long ago.
Let’s take a close look at how different things would be for Ghosn if he were in the United States.
What charges could he face?
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Japanese prosecutors have accused Ghosn of an abuse of corporate trust, a crime that does not exist in federal law in the United States. He is also charged with underreporting $80 million in income and temporarily transferring a personal debt to Nissan.
Prosecutors in the United States often use mail- and wire-fraud laws to accuse individuals of deception when they make personal gains. But there is a question of whether Ghosn actually misled Nissan, Mitsubishi or Renault, the three companies for which he served as chairman. In an interview with The Nikkei Asian Review, he maintained his innocence and accused senior executives at Nissan of an exercise in “plot and treason” carried out to have him removed from his position at the company.
The Securities and Exchange Commission (SEC) has requested information from Nissan and Ghosn about any financial improprieties and possible misstatements in their financial reports. If there were to be a case filed against either party in the United States, it is much more likely to be a civil action, rather than a criminal prosecution, for violating the accounting requirements for companies whose shares are publicly traded. (Although violation of the federal securities laws can be charged as a crime, the Justice Department usually leaves accounting and corporate governance issues of the type involving Ghosn to civil regulators because proving the required intent can be difficult.)
Ghosn could also be accused of a crime in the United States for any underreporting of taxes owed on his pay, if he sought to avoid paying them on corporate benefits.
Under tax laws, attempts to evade or defeat a tax or make false statement on any document filed with the IRS can result in criminal charges. Those crimes require showing that a defendant knew about the tax-reporting law and purposefully defied it, so most cases involving a failure to pay the requisite taxes are handled through a civil audit in which the overdue taxes and a penalty are assessed. Criminal charges for this type of violation are uncommon when there is no evidence of active hiding of funds, such as creation of a secret offshore account.
How would he be questioned?
The Japanese Constitution states that “no person shall be compelled to testify against himself” and that a “confession made under compulsion, torture or threat, or after prolonged arrest or detention shall not be admitted in evidence.” But Ghosn continues to be interrogated about the alleged crimes. The protections afforded to a defendant do not preclude repeated questioning about the charges, even if the person refuses to cooperate.
In the United States, defendants cannot be questioned without their lawyer present after prosecutors have filed charges. The right to counsel begins once the prosecutor initiates the case, and every defense lawyer will tell the client the same thing: “Shut up.”
Would he be detained?
In Japan, prosecutors can extend the time for which a defendant can be held by filing new charges, and during that period, prosecutors and investigators can question the defendant without the person’s lawyer present.
Even if federal prosecutors in the United States were to pursue a criminal case, there is little chance that Ghosn would be detained awaiting his trial. The Constitution requires that a person be brought before a court within 48 hours of an arrest without a warrant and that they be held before trial only if the government provides evidence that the person poses a risk of flight or a threat to the community.
What about bail?
The Japanese court has not released Ghosn on bail because it found probable cause that he might flee or destroy evidence. That could be a basis for detaining a defendant in the United States, but in a white-collar-crime case, the potential for evidence destruction is often minimal because corporations can be expected to maintain records and provide them voluntarily.
In most white-collar cases, the defendant is released on a “personal recognizance” bond that does not require posting any money to the court, but instead making a promise to pay if the defendant does not appear at a subsequent proceeding. These defendants rarely pose any threat of violence to others.
Judges often impose conditions on a defendant to ensure that the person will appear. For example, family members may be required to post security, such as property or other assets. A foreign defendant will usually be required to give up a passport and agree to some form of regular monitoring.
The Eighth Amendment also states that “excessive bail shall not be required.” Although the Supreme Court has held that the Constitution does not require a court to grant bail, in the federal system, there is a presumption in favor of releasing a defendant unless the person is charged with a major drug offense, a crime of violence or child pornography. So even if Ghosn were accused of a crime, there is a strong likelihood that he would have been released within days of an arrest.
The criminal-justice system in the United States has its share of flaws, and there are persistent concerns about defendants being jailed because they cannot afford to pay their bail. But in white-collar cases, that is rarely a concern — so even a notorious swindler like Bernie Madoff has been released until there was a finding of guilt on the charges made against him.
What about Ghosn’s real-life detention?
It appears unlikely that Ghosn will be released before his trial in Japan. A group of French lawyers sent a letter to the Japanese government protesting the harsh treatment he has received, but to no effect. What the arrest and prosecution show is the peril that foreign executives face if they are the subject of a criminal accusation in some other jurisdictions. What we take for granted in the United States does not necessarily translate when another government’s prosecutors pursue criminal charges.