Carlos Ghosn and Nissan were indicted in Japan on Monday for understating Ghosn's income by $43 million, as Tokyo prosecutors pushed ahead with the criminal investigation that has shaken the global auto industry.
Former Nissan representative director Greg Kelly was also indicted, three weeks after he and Ghosn were arrested in Japan and accused of financial crimes.
Under the Japanese system, indictment allows prosecutors to lay formal charges. While a detainee may be able to apply for bail, Ghosn, who was ousted as Nissan's chairman shortly after his Nov. 19 arrest, will likely remain behind bars because he was also re-arrested on new allegations of understating income that pertain to a different time period, prosecutors said in Tokyo Monday.
Ghosn will remain in custody as prosecutors continue to investigate additional suspected crimes.
A trial typically takes place about 40 to 50 days after indictment. Ghosn's trial is likely to take place at the Tokyo District Court or a similar tribunal, where cases are argued in front of three judges. Should he want to, Ghosn is likely to be able to appeal the verdict twice, first to high court and then supreme court. If convicted, Ghosn could face up to 10 years in prison, prosecutors have said.
Japan has one of the highest criminal conviction rates in the world, and prosecutors typically try to use interrogations to extract signed confessions from defendants. Fewer than 1 percent of cases in Japan's district and county courts resulted in a not-guilty verdict or the defendant being released in 2017, according to prosecution data.
In the first sign of blowback from the scandal for Nissan, the company was also indicted for breaching Japan's financial instruments and exchange law by under-reporting Ghosn's compensation, prosecutors said. The automaker now finds itself ensnared in the scandal enveloping Ghosn, after it accused the 64-year-old of the income-reporting violations and misusing company assets -- including Nissan-owned houses -- following an internal probe.
The shock arrest of Ghosn has escalated tensions between Nissan and partner Renault, whose car alliance -- the world's largest -- has been held together by the executive for almost two decades. While Renault named an interim replacement following the arrest, Ghosn technically remains the chairman and chief executive officer of the French automaker while it seeks more information and evidence about the accusations.
Monday's charges by the prosecutor's office did not mention allegations of luxury homes Nissan is supposed to have bought for Ghosn in cities including Paris and Rio de Janeiro or misusing company money. Ghosn denies the charges, his lawyers said previously amid a continuous leak in various media outlets about his alleged wrongdoings, including passing on his trading losses to the automaker.
The timing of the company's probe prompted some analysts to say the scandal may have been manufactured in order to block a merger that Ghosn was advocating between Nissan and Renault. CEO Hiroto Saikawa has denied that such a motive was behind the investigation.
Still, Saikawa and other Japanese executives within Nissan have spoken strongly against a merger. Saikawa, a former protege of Ghosn's, is now potentially succeeding him as Nissan's chairman after already taking over as CEO last year. Ghosn remains the chairman of the Amsterdam-based Renault-Nissan-Mitsubishi Motors alliance.
Renault executives are suspicious of Nissan's motives, demanding to see proof from the Japanese automaker of the accusations against Ghosn, people familiar with the matter have said. Nissan offered up a presentation summarizing his alleged transgressions, but Renault declined, requesting the presence of lawyers and the full report on the allegations, the people said.
Renault and Nissan have complicated cross-shareholdings, and poor relations would make operations difficult. The French automaker is the largest shareholder in Nissan and has voting rights, while the Japanese company is the second-largest shareholder in Renault, with no votes. Nissan is keen to achieve a more equal power balance, but its demands have been stonewalled by Renault and the French state.