Why Ghosn's Still Jailed and What It Says About Japan

Carlos Ghosn was a jet-setting captain of industry, the brash superhero who helped save both Renault SA and Nissan Motor Co. To the shock of many, on Nov. 19 he was arrested in Japan and has been detained ever since in a murky case involving his personal finances, with no release date in sight. Ghosn’s alleged conduct is not the only thing under scrutiny. So is Japan’s legal system and its near-perfect conviction rate.

Filing false statements to regulators regarding income from Nissan deferred until retirement – a total of $80 million. Starting in 2009, when Japan required companies to make executive compensation public, Ghosn’s reported pay was roughly half what he had been making before, but his deferred pay ballooned, said people familiar with the probe. Japanese law requires remuneration to be reported in the year it’s fixed, even if the payout happens later, according to Kyodo News. (There are similar rules in the U.K. and coming this year across Europe.) Ghosn’s pay was an image problem in Japan and he had been called out on it before. He’s also been charged with aggravated breach of trust for acts including temporarily transferring personal investment losses to Nissan in 2008. Both charges carry a potential maximum sentence of 10 years in prison and a fine of up to 10 million yen ($90,000).