Tokyo prosecutors appeal after court decides against extending Ghosn detention

By Kiyoshi Takenaka

TOKYO (Reuters) - Tokyo prosecutors have appealed a court decision that prevents further detention of Carlos Ghosn, a surprise ruling which could free the ousted chairman of Nissan Motor Co Ltd for the first time since his arrest for alleged financial misconduct.

The Tokyo District Court on Thursday also decided against extending the detention of Greg Kelly, a former Nissan executive who was arrested along with Ghosn on Nov. 19.

There is no set timing for a decision on the appeal, but an appeal defence lawyers lodged previously to prevent the executives' re-arrest was rejected in about three hours.

Late on Thursday, a man resembling Ghosn's lawyer Motonari Otsuru entered the tower-like Tokyo Detention Center where Ghosn and Kelly are held, passing a crowd of waiting camera crews, a Reuters journalist reported from the scene. The man did not make any comments. Kelly's lawyer was not available for comment.

The executives have not been able to make any public statements since their initial arrest, though local media have reported that both men have denied wrongdoing.

Ghosn led Nissan, Mitsubishi Motors Corp and France's Renault SA. He was indicted on Dec. 10 for allegedly understating his income by about half over a five-year period from 2010, and re-arrested the same day for the same alleged crime covering the past three years. The 10-day detention period in the second instance ran out on Thursday.

The court had widely been expected to extend the detention for at least another 10 days, as granting bail to suspects who insist on their innocence has until recently been unusual in Japan. It did not disclose reasons for its decision.

The high-profile case has put Japan's criminal justice system under international scrutiny and sparked criticism for some of its practices, including keeping suspects in detention for long periods and prohibiting defence lawyers from being present during interrogations, which can last eight hours a day.

The court's decision could reflect sensitivity to that criticism as well as changing attitudes in the courts, said Masashi Akita, a defence lawyer in Osaka with over 30 years' experience.

"They are very nervous about criticism of their lenient approach toward detention. This is a typical case of such changing, I suppose," Akita said in emailed responses to Reuters' questions. "I think this case has a big impact and effect on the Japanese justice practice, and such a move is favourable for the defence side."

Public broadcaster NHK said Ghosn could be released on Thursday or Friday if any appeal by prosecutors is rejected by the court and bail is granted. However, Akita said it could take until the middle of next week for all procedures to run their course - if indeed the men are freed.

BAIL AMOUNTS

Ghosn's arrest marked a dramatic fall for a leader once hailed for rescuing Nissan from the brink of bankruptcy.

Accustomed to a globe-trotting lifestyle, Ghosn has been detained in a small room without a heater and a toilet in the corner. Authorities have limited his opportunities to shower and shave, a person familiar with the matter previously told Reuters.

It was not immediately clear how much bail would be, or if would even be granted.

Activist fund manager Yoshiaki Murakami, arrested in 2006 for insider trading, paid an initial 500 million yen ($4.47 million) in bail.

At the centre of allegations against Ghosn is his Nissan income, with Tokyo prosecutors charging the executive for failing to disclose compensation that he had arranged to receive later.

Nissan has said a whistleblower investigation also uncovered personal use of company funds and other misconduct.

The scandal has shaken the Nissan-Mitsubishi-Renault alliance, with Nissan Chief Executive Hiroto Saikawa calling for changes to weaken the clout of Renault SA, which owns a controlling stake in Nissan.

Renault has so far not replaced Ghosn as its head, saying his compensation had been in compliance with law and governance guidelines.

Documents seen by Reuters showed that some discussions about compensating Ghosn out of the public eye were not confined to Nissan, but also included Renault executives. Renault told Reuters that any such pay would have had to be made public in France.

Nissan on Thursday said Saikawa earlier this week held a one-on-one meeting with Renault acting boss Thierry Bollore, saying Saikawa described the meeting as "positive". It did not disclose details of the discussions.

Nissan declined to comment on the court's decision.

($1 = 111.8700 yen)

(Reporting by Kiyoshi Takenaka; Additional reporting by Malcolm Foster, Chris Gallagher and Tim Kelly; Writing by Ritsuko Ando and Malcolm Foster; Editing by Muralikumar Anantharaman and Christopher Cushing)