A court ruling concerning alleged financial misconduct by Carlos Ghosn, former chairman of Nissan Motor Co., only increased the frustration and disappointment at his absence from the courtroom.

The Tokyo District Court on March 3 found both former Nissan director Greg Kelly and the automaker guilty of helping Ghosn underreport his huge executive compensation package.

The ruling said the failure to disclose a total of about 9.1 billion yen ($78.86 million) in unpaid remuneration for Ghosn between fiscal 2010 and fiscal 2017 in financial statements amounted to “false” reporting as banned by the Financial Instruments and Exchange Law.

It decided that Ghosn and a former head of the secretary’s office at Nissan conspired to hide the renumeration for the eight-year period from financial regulators.

It also concluded that Kelly was only aware that the amount for fiscal 2017 was not reported properly.

Since Ghosn illegally fled Japan at the end of 2019, the judicial process against crimes he allegedly committed has been suspended.

Ghosn has claimed he escaped from Japan because of his distrust of Japan’s criminal justice system.

But he managed a well-known company as its chief executive for years, and his words and actions attracted much attention. He should defend himself in the courtroom and seek judicial judgement on his case.

Ghosn has also been indicted for aggravated breach of trust under the Company Law.

The government should make tenacious efforts to gain cooperation from Lebanon, the destination of his flight, as well as other related countries and international organizations in its quest to capture the fugitive.

Despite the absence of the leading figure of the scandal, the court ruling has massive implications not only for corporate management in general but also for related investigations and trials.

According to the ruling, Ghosn and other members of Nissan’s management team at the time devised a scheme in which Ghosn would receive part of his renumeration after his retirement to avoid being criticized for his hefty pay package.

The court criticized this plot for running counter to the spirit and purpose of a system to demand disclosure of more specific and detailed information about corporate governance. It decided that such an act can be subject to criminal punishment.

The court also argued that “growing dependence on the former chairman and an increasingly excessive sense of being intimidated (by his power) disabled the company’s system to monitor and check (the CEO’s actions), leading to the crimes.”

All people involved in corporate management should take these observations made in the ruling seriously.

Another important issue raised by the ruling is how to assess the credibility of testimonies obtained through plea bargaining.

The ruling said such testimonies should be carefully evaluated from the viewpoint of whether there is sufficient material to support them, such as objective evidence and testimonies by other people involved.

The court scrutinized the testimony given by Toshiaki Onuma, the former head of the secretary’s office, who agreed to a plea bargain with prosecutors. It acquitted Kelly of most of the charges of involvement in the illegal scheme filed against him by prosecutors.

In 2018, Japan introduced its own system of plea bargaining, an agreement between a defendant and prosecutors, in which the prosecutors agree to drop one or more charges or reduce a charge to a less serious offense in exchange for the defendant helping them prosecute others.

The investigation into Ghosn’s alleged crimes was the second case of utilizing the system.

Plea bargaining could serve as a powerful tool for law enforcement authorities to hunt down key culprits, particularly in cases of corporate crimes.

But experts are concerned about the system leading to legal proceedings against people who have nothing to do with the crime and resulting in wrongful prosecutions and convictions.

How to use plea bargaining appropriately is a major challenge for the judicial community, composed of judges, lawyers and prosecutors.

--The Asahi Shimbun, March 4