The Japanese and Canadian governments have failed to manage effectively the reputational, economic, and geopolitical implications of the legal cases against Nissan chairman Carlos Ghosn and Huawei CFO Meng Wanzhou. And, in a globalized world, the risks posed by such cases are likely to grow.
CANBERRA – On November 19, Carlos Ghosn, the board chair and former CEO of Nissan, was arrested at Tokyo’s Haneda Airport on suspicion of under-reporting income and misusing corporate funds for personal purposes; he remains in custody. Less than two weeks later, Meng Wanzhou, the chief financial officer of Huawei and daughter of its founder, was arrested in transit at Vancouver’s airport on charges by the United States that Huawei had violated US sanctions against Iran; out on bail, she now awaits an extradition hearing.
These two cases are technically unrelated. But both underscore an important truth: in a globalized world, domestic legal processes can have major international repercussions.
Ghosn’s arrest put Japan’s justice system on trial in the court of world opinion. In fact, Japan lacks many of the elements of due process found in Anglo-American jurisprudence, such as the right to have a lawyer present during questioning. As a leading Japanese criminal defense attorney, Makoto Endo, put it, Japan’s criminal justice system operates on the premise of “guilty until proven guilty.”
But it may be even worse than that: a 99% conviction rate (among those who are indicted) implies that Japan’s prosecutors and courts could be colluding, rather than working to achieve justice. For example, prosecutors’ requests for extensions of custody (up to 23 days) are rarely rejected, and bail is seldom granted. Many suspects who are released on bail are re-arrested repeatedly on fresh charges until a confession is secured.
The problems with Japan’s justice system have been on public display since Ghosn’s arrest. On January 8, using a rarely invoked constitutional provision, Ghosn made his first court appearance, at which he rejected all accusations as “meritless and unsubstantiated.” On the face of it, his ten-minute rebuttal seemed more plausible than the prosecution case against him. Yet he remains in jail.
The way Ghosn appeared in court – handcuffed, a rope around his waist, and wearing plastic slippers – exacerbated what was already becoming a global public-relations disaster for Japan. And yet, on January 10, prosecutors filed two additional charges against him. He could now be stuck in jail for six months until the trial begins. The silver lining is that Ghosn’s case could spur a much-needed overhaul of Japan’s legal system to balance better the interests of prosecutors and the rights of defendants. But that can happen only if he is acquitted.
When it comes to Meng’s arrest, the international implications are more palpable: Canada has now become a battleground in the Sino-American trade-cum-technology war. Indeed, US President Donald Trump himself politicized the case by declaring that he could intervene in the case if it would help to repair US relations with China. In other words, he made Meng a bargaining chip in the escalating bilateral conflict.
As Jeffrey D. Sachs notes, the arrest of top executives for corporate malfeasance (as opposed to personal crimes like embezzlement) is rare in the US. Huawei is China’s largest international tech company, and has emerged as a world leader in 5G technology. Realizing that it is losing its competitive edge, the US is now scrambling to recapture it, using its global financial clout.
So, while Ghosn’s case exposed what Brad Adams, the Asia director of Human Rights Watch, has called Japan’s “long overlooked ‘hostage justice’ system,” Meng’s arrest has been condemned by some as tantamount to “kidnapping” and “political hostage-taking.” That is not surprising. Imagine that China imposed unilateral sanctions on firms doing business in Taiwan, and then called for the arrest of their executives in third countries like Japan and South Korea.
Meng’s case raises three key questions. Should international transit corridors at airports function as legal trapdoors for travelers? Why has Canada given a US law precedence over Canadian, Chinese, and international law? Why should China tolerate the unilateral arrest in Canada of one of its leading citizens, who had not violated any Canadian, Chinese, or international law?
China certainly is not taking Meng’s arrest lying down. Like the US, China is not averse to wielding its diplomatic clout, military might, and financial muscle to protect its interests. Already, the Chinese authorities have arrested two Canadians in retaliation, and earlier this month, Canadian Robert Lloyd Schellenberg was resentenced to death for a drug-trafficking conviction, after initially receiving a 15-year prison term.
Echoing Canadian Prime Minister Justin Trudeau’s position on Meng’s arrest, China’s foreign ministry spokeswoman Hua Chunying – who had criticized the Meng case as “an abuse of judicial procedures” – rejected Canada’s appeal for clemency for Schellenberg. Out of respect for the rule of law, Hua said, China’s government would not interfere in the judicial proceedings.
China’s retaliation against Canadians is as unjustified as it is predictable. After all, it is both less costly and less risky for China to take aim at Canada than at the US. This does not, however, mean that China would not be willing to defy the US, especially if the US continues to pursue its emerging containment strategy.
China is not alone. Non-Western countries have not backed Canada on the Meng issue, highlighting a broader clash of political cultures. In fact, a growing number of non-democratic countries, including China, have lately been testing the standards of state behavior established, enforced, and arbitrated by the West.
The Canadian and Japanese governments have failed to manage effectively the reputational, economic, and geopolitical ramifications of the Meng and Ghosn cases, which, given the interconnectedness of today’s world, are unlikely to be the last of their kind. To ensure that such cases do not escalate into potentially destabilizing international incidents, creative diplomacy – focused on finding an appropriate balance between legal values and geopolitical interests – will be vital.