Former Nissan Motor Co Chairman Carlos Ghosn attends a press conference in Yokohama on May 12, 2016. Photo: AFP / The Yomiuri Shimbun

The French-speaking CEO of a Japanese company that generates millions in profits is suddenly arrested on charges that seem trivial, then re-arrested, and re-arrested, indicted for aggravated breach of trust and held for months in jail, only to be put on trial and found … innocent?

If you’ve been following the saga of Carlos Ghosn, the former Nissan chief,  this story should sound familiar – except for the “not guilty” verdict.

There is little doubt that Ghosn once intended to stay and prove his professed innocence in Japan’s criminal justice courts, where the indicted have only a 1% chance of actually winning. The conviction rate is 99%.

Along the way, not surprisingly, he became chummy with Mark Karpeles, the French-born former CEO of Bitcoin exchange Mt Gox. Karpeles had beaten the odds to win an extremely rare victory in Japan on two felony counts.

Those counts included special breach of trust, the same charge Ghosn has also been indicted on. However, in explaining the harsh realities of the Japanese justice system, Karpeles – who had triumphed only after very considerable trials, tribulations and uncertainties – may have provided the tipping point in Ghosn’s decision to take flight.

Pre-Ghosn Ghosn

In Japan, history repeats itself. Endlessly.

Typhoons blow, earthquakes shake the land. Advertising giant Dentsu overworks an employee until he commits suicide. Then they do it again.

Nobusuke Kishi, one of the masterminds of Japan’s brutal Asian war, gets out of jail, returns to power as prime minister and tries to rid Japan of its pacifist post-war constitution. His maternal grandson, Shinzo Abe, exits political exile, returns to power and also tries to rid Japan of its pacifist post-war constitution.

Under this same dynamic, there was a Carlos Ghosn before Carlos Ghosn.

Karpeles was the CEO of what was once the world’s largest Bitcoin exchange, Mt Gox, until it went bankrupt on February 28, 2014 – with 650,000 Bitcoins worth US$400 million missing. In a case that I discussed with Ghosn and his lawyer that seems to parallel his own, Mark Karpeles was arrested for improper transfer of electronic funds in August of 2015. His trial finally concluded in 2019.

Ghosn spent more than 100 days in pre-trial detention because he wouldn’t confess to the crimes he was accused of. He was then re-arrested and put back in confinement because he tried to hold a press conference.

Karpeles had it rougher. He spent 11 months in detention. He jokingly refers to the dingy, poorly heated holding cells as “Japan’s government-supplied hotels.”

The collapse of the exchange drove the Bitcoin market into chaos and made the cryptocurrency essentially radioactive at a time when Japan was trying to remake itself as a cryptocurrency capital. Even today, more than 30% of Bitcoin transactions are conducted in yen.

Japanese law enforcement arrested and prosecuted the wrong people. After leaking to the influential newspaper Yomiuri Shimbun that their investigation showed the hack was an inside job, the Tokyo Metropolitan Police with much fanfare arrested Karpeles in August 2015.

They expected he would crack under interrogation. Given that, once arrested, suspects can be held 23 days in detention before they must be indicted or released, that was not an unreasonable assumption. Interrogations go on all day. Lawyers are not allowed to be present.

But Karpeles didn’t confess. Prosecutors kept re-arresting him and denied his lawyer’s request for bail again and again. During his incarceration, he suffered mild frost-bite, malnutrition and sleep disorders and went slightly stir crazy. He finally won bail in July 2016.

Mark Karpeles, the foreign CEO who proved it is possible to win a non-guilty verdict in the Japanese legal system. Photo: courtesy of Jake Adelstein

External evidence

None of the charges had anything to do with the actual theft of the Bitcoins, even though solving that case was the purpose of the original investigation – something a detective admitted on the stand.

The problems with the case became apparent in the spring of 2016, when a task force led by the US Internal Revenue Service, including Homeland Security Investigations and the FBI, contacted Japanese authorities for help in capturing an international criminal that they believe had hacked Mt Gox and other cryptocurrency exchanges. They wanted access to the Mt Gox database so they could track the cryptocurrency Keyser Söze.

Tokyo refused to cooperate. A special agent on the case, visiting Japan from the US, reached out to me in the summer of 2016, completely baffled. “Why won’t the police help us out on this?” he asked me over beers.

“Oh, that’s because if you catch the actual criminal, it doesn’t help them win. It just embarrasses them. They don’t care about justice.”

It didn’t surprise me that the police and prosecutors didn’t want to find the real criminal: I had seen it before in the 2002 Nick Baker drug smuggling case. In that case, Japanese prosecutors declined evidence from overseas police agencies that supported Briton Baker’s assertion that he had been framed by his traveling companion. Their aim in the case was simple: conviction.

In the end, I obtained a copy of the Mt Gox database and handed it to US investigators. They subsequently arrested the person suspected of the hack, in Greece. The arrest of the real criminal may be one reason Tokyo District Court found Karpeles not guilty of embezzlement or special breach of trust last March.

He was found guilty on one charge of mishandling electronic funds and given a suspended sentence. Amazingly, the prosecutors did not appeal – which they can do and almost always do. Karpeles appealed his one guilty count; it is still under appeal.

Mark meet Carlos 

Karpeles and Ghosn first became acquainted in May last year and met several times. Ghosn had been studying the intricacies of the Japanese legal system and was interested in Karpeles’s experiences. They spoke in French, usually over a meal.

Karpeles was reluctant to discuss the meetings. “Anyone who is associated with the accused in a trial here tends to find themselves harassed and bothered and embarrassed,” he said.

However, he did acknowledge having given Ghosn the benefit of his experiences. In their talks, Karpeles discussed his case and they reminisced about the tough conditions in detention, where suspects are monitored all day, exercise is limited, reading materials are censored, visitations are limited and, even at night, lights are left on.

“I know Japanese courts are difficult to fight with,” he said. “The Japanese court system is like riding a roller coaster … and while things are going up and down, and especially where you take a deep dive, you really feel like you’re going to die.”

He told Ghosn that it might be hard to prove his innocence. “I can’t say that it would be easy but I kind of did it,” he said. “I’ve been judged innocent of special breach of trust, a charge I believe that he is facing.”

However, while Karpeles intended to cheer up Ghosn, his remarks may have had the opposite effect. A close friend of Ghosn recalls that after one meeting with Karpeles, Ghosn expressed even greater despair – despair that he would never really be exonerated.

Karpeles isn’t sure what he said that provided Ghosn with a trigger.

“I did tell him it was very unlikely he would be found not guilty on all counts – the judge has to let the prosecutor save face, you know!” Karpeles said. “They can appeal and they usually do. I told him that he’d have to go all the way to Supreme Court to be completely exonerated, or even partially, and that it might take many, many, many years. Maybe 10 years.”

For the 65-year-old Ghosn, a decade may well have seemed like a very long time – especially when the prosecutors refused even to let him meet his wife. If even Karpeles, with external facts on his side, couldn’t achieve a total victory, what were Ghosn’s chances?

Yet Karpeles admits he was astonished when Ghosn fled the country: He felt that Ghosn should have fought it out.

“Even if he is not sure of a not guilty verdict, he could still go with it … even if he was given jail time, he could still appeal and [possibly] be free the same day on bail,” Karpeles said. “It is still not too late to run away from the country then.”

Lawyer against the system

Even so, Karpeles may not have been the only key person who influenced Ghosn’s decision to escape Japanese justice.

One of his defense lawyers, Takashi Takano, in a poignant blog post this Saturday, narrated Ghosn’s gradual loss of hope, and his switch from defiant anger to hopelessness.

Ghosn asked, “Can we hope for a fair trial?” I told him,“Unfortunately, in this country the defendants cannot expect a fair trial. Judges are not independent but part of a bureaucracy. The Japanese press are like flacks for the prosecutor’s office. However, many Japanese don’t realize it, and you didn’t either. You’ve been the CEO of a Japanese corporation for two decades, and you didn’t know anything about the reality of Japan’s justice system.”

“I never even thought about it,” he answered.

“If you were arrested, did you expect to be released on bail immediately if you paid?”

“Of course.”

“This country is different: Terrorists, thieves, politicians, and charming business executives, they’re all detained for 23 days once arrested. And they will be interrogated five or six hours a day, even through the night, without their lawyer present. If they do not confess their crimes, they will continue to be detained. [But[ everyone believes Japan is a civilized country where human rights are guaranteed.”

“So I can’t expect a fair trial?”

“You cannot expect it.”

Tipping point

In the end, Ghosn appears to have decided he was playing a game he could never win.

While the prosecutors and Nissan leaked damaging information to a pliant press, as soon as he tried to speak publicly, he was arrested again. When we met last July, Ghosn couldn’t be quoted on the record for fear the prosecutors would once again throw him into jail as retaliation.

Many in Japan – and around the world – will be awaiting his press conference on Wednesday in Beirut, where Ghosn at last will speak out freely about his ordeal and his accusers.

Jake Adelstein is a Japan-based journalist and author. A former crime reporter for the Yomiuri Shinbun, he is the author of a book on the Karpeles case,  I Sold My Soul in Bitcoins. 

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