Photo/IllutrationNissan Motor Co.'s headquarters in Yokohama (Asahi Shimbun file photo)

Carlos Ghosn, ousted as chairman of Nissan Motor Co. over allegations of financial impropriety, was indicted on Jan. 11 on two new charges of financial misconduct.

He is accused of aggravated breach of trust under the company law and a violation of the financial instruments and exchange law by under-reporting his remuneration from fiscal 2015 through fiscal 2017.

Since Ghosn denies all the charges against him, the outcome of his trial is unpredictable.

Given the enormous scale of Nissan's daily operations, the automaker needs to act swiftly to put its corporate governance back on a solid and healthy footing.

Shortly after Ghosn's surprise arrest in November, Nissan dismissed him as chairman and stripped him of the right to represent the company.

Nissan said several months of an internal investigation before his arrest had turned up serious wrongdoings. But the company has yet to disclose details of his alleged misconduct.

Clearly, there are limits to how much related information Nissan can disclose for fear of compromising the investigation into Ghosn's financial affairs by the Tokyo District Public Prosecutors Office and his trial.

Ghosn's abrupt downfall came after reigning supreme over the company for two decades, during which he played the central role in managing Nissan’s relations with its French partner Renault SA. The Japanese car manufacturer is now facing a critical situation.

To return to a strong footing, Nissan must clarify the root causes of the scandal and determine who should be held responsible.

As a listed company which serves many consumers, hires many employees and does business with many partners, Nissan has a duty to carry out a fair and transparent investigation into the matter and disclose as much information as possible.

Nissan itself has been indicted for violating the financial instruments and exchange law and should be held strictly accountable for what happened.

Nissan has appointed independent legal and other experts to head a special committee to look into its governance. In its first set of recommendations to be made at the end of March, the panel will advise the company on how to improve the process of deciding executive compensation.

But Nissan urgently needs an in-depth investigation to identify problems concerning its entire corporate governance.

Even if Ghosn is almost the only person who will face criminal charges with regard to the scandal, it is vital to find out whether other members of the board fulfilled their responsibilities. Otherwise, it will be impossible for the company to form and install a new management team.

It has been reported that there are disagreements between Nissan and Renault over the assessments of Ghosn’s performance and behavior and when an extraordinary shareholders’ meeting should be held to discuss related issues.

Nissan was once rescued from the brink of failure by Renault. But the two companies should now engage in constructive dialogue over what kind of relationship is the most beneficial for both sides while paying attention also to the interests of minority shareholders and employees.

The Ghosn affair has also cast fresh light on certain problems with Japan’s criminal justice system.

Many foreign news reports on the scandal have been critical about the lengthy detention period and the rule that bans the presence of the suspect’s lawyer during interrogations.

Parts of these reports are based on misunderstandings of the Japanese system, but it is true that Japanese law enforcement authorities have traditionally resorted to a questionable investigation approach focused on exerting pressure on suspects to make confessions through prolonged detention.

This approach, known as “hitojichi shiho” (hostage judiciary) in Japan, has also been criticized at home.

Tokyo prosecutors resorted to plea bargaining to collect evidence that enabled them to arrest and re-arrest Ghosn, and prolong his detention.

The Tokyo District Court did, in fact, reject a request by prosecutors to extend his detention. The way prosecutors have carried out the investigation has left many Japanese citizens wondering whether the current system is fair and reasonable.

Legal and academic circles should acknowledge that the situation surrounding the investigation into Ghosn’s alleged wrongdoing could seriously undermine the credibility of the nation’s judicial system as a whole and start serious debate for improvement.

--The Asahi Shimbun, Jan. 12