By Kiyoshi Takenaka and Tim Kelly
TOKYO (Reuters) - Ousted Nissan Motor Co <7201.T> Chairman Carlos Ghosn declared his innocence in his first public appearance since his arrest in November, telling a Tokyo court on Tuesday that he was wrongly accused of financial misconduct.
"I have been wrongly accused and unfairly detained based on meritless and unsubstantiated accusations," Ghosn told the Tokyo District Court. He spoke clearly, though he looked thinner with sunken cheeks and his dark hair showing grey roots.
"Contrary to the accusations made by the prosecutors, I never received any compensation from Nissan that was not disclosed, nor did I ever enter into any binding contract with Nissan to be paid a fixed amount that was not disclosed," Ghosn said.
Journalists and television crews thronged outside the court as Ghosn - credited with rescuing Nissan from near-bankruptcy two decades ago - entered in handcuffs and a rope around his waist, led in by two guards.
The hearing received top billing on TV news updates throughout the day and some 1,122 people had lined up for 14 court seats assigned by lottery, highlighting the interest in the case of the once-feted executive.
The court hearing, requested by Ghosn's lawyers, was held to explain the reasons for his prolonged detention since his Nov. 19 arrest rather than to argue merits of the case. Presiding Judge Yuichi Tada said the detention was due to flight risk and possibility he could conceal evidence.
Ghosn used the opportunity to deny accusations against him, a move that defense lawyer Masashi Akita said could prove risky if prosecutors use it to build their case.
"From my point of view as a defense lawyer, there is some risk in disclosing his opinion in open court," he said.
Ghosn's legal team, headed by former prosecutor Motonari Otsuru, are expected to explain his defense at a press conference later in the day.
INVESTMENT LOSSES AND SAUDI PAYMENTS
The 64-year-old executive has been formally charged with under-reporting his income. He has also been arrested, but not yet indicted, on allegations of aggravated breach of trust in shifting personal investment losses worth 1.85 billion yen (13.28 million pounds)to the carmaker.
"I believe strongly that in all of my efforts on behalf of the company, I have acted honorably, legally, and with the knowledge and approval of the appropriate executives inside the company," Ghosn said.
Regarding allegations that he transferred losses to Nissan, Ghosn said he had asked the company to temporarily take on collateral for his foreign exchange contracts. He said he did this to avoid the only other choice he had, which was to resign and use his retirement allowance for collateral.
"My moral commitment to Nissan would not allow me to step down during that crucial time," said Ghosn. "A captain doesn't jump ship in the middle of a storm."
Ghosn said the contracts were transferred back to him and that Nissan did not incur any loss.
Ghosn is also accused of making $14.7 million in payments to Saudi businessman Khaled Al-Juffali using Nissan funds in exchange for arranging a letter of credit to help with his investment losses.
Ghosn said that Juffali's company was compensated for "critical services that substantially benefited Nissan", including soliciting financing and resolving a business dispute.
The Khaled Juffali Company also issued a statement on Tuesday saying it had received the payments for legitimate business purposes.
Nissan, which has ousted Ghosn as chairman, reiterated that its internal investigation prompted by a whistleblower had uncovered "substantial and convincing evidence of misconduct" and that its investigation was ongoing and expanding in scope.
The case has rattled Nissan's alliance with French automaker Renault SA <RENA.PA>, where Ghosn still remains chairman and chief executive. He had been pushing for a deeper tie-up between the pair, including potentially a full merger at the French government's urging, despite strong reservations at Nissan.
His arrest has also 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 that can last eight hours a day.
Ghosn has been held at the Tokyo Detention Center, a spartan facility where small rooms have a toilet in the corner and no heater - a far cry from the jet-setting lifestyle Ghosn was accustomed to. His son, Anthony Ghosn, said his father had lost 10 kgs (22 pounds) during his detention, according to France's weekly Journal du Dimanche.
Under Japanese law, suspects can be detained without charges for up to 23 days, and then re-arrested on separate allegations.
On Dec. 31, the Tokyo District Court granted prosecutors' request to extend Ghosn's detention by 10 days until Jan. 11.
He is expected to remain in detention through his trial.
It is unclear if he will be granted bail, which is historically rare for suspects who insist on their innocence, although it is becoming more common.
Nissan's Representative Director Greg Kelly, who was also arrested on Nov. 19 and has been charged with conspiring to under-report Ghosn's income, was released on Dec. 25 after posting bail of 70 million yen, or about $640,000, in cash.
(Reporting by Kiyoshi Takenaka and Tim Kelly; Additional reporting by Elaine Lies, Maki Shiraki, Mari Saito and Naomi Tajitsu; Writing by Ritsuko Ando; Editing by Himani Sarkar and Christopher Cushing)