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Japan

Ousted chairman Ghosn accused of making Nissan pay for his personal investment losses

  • The 64-year-old was dismissed last week following his arrest on suspicion of under-reporting his remuneration in securities reports
PUBLISHED : Tuesday, 27 November, 2018, 10:22am
UPDATED : Tuesday, 27 November, 2018, 10:49pm

Former Nissan Chairman Carlos Ghosn is suspected of shifting some 1.7 billion yen (US$15 million) of personal investment losses to the carmaker in 2008, adding to the financial misconduct allegations against him, sources close to the matter said on Tuesday.

Japan’s Securities and Exchange Surveillance Commission was aware of the alleged misconduct in relation to Ghosn’s derivatives trading and notified the bank involved in the transaction of the possibility that he had committed an aggravated breach of trust, the sources said.

Nissan shouldered the losses incurred amid the global financial crisis in 2008 after Ghosn could not secure sufficient collateral, they said.

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Ghosn was arrested by Tokyo prosecutors last week for allegedly violating Japan’s Financial Instruments and Exchange Act by under-reporting his remuneration by around 5 billion yen (US$44 million) over five years to March 2015 even though he received some 10 billion yen (US$88 million) in the period.

The prosecutors are also considering building a case against him for allegedly under-reporting a further 3 billion yen (US$26 million) in remuneration received over three years from April 2015.

The former Nissan chairman has denied intending to falsify the financial statements, but admitted that he did not include in the documents part of the remuneration he was set to receive when he retires because the “payments have not been settled,” according to the sources.

The sources said Ghosn believed he should receive some 2 billion yen (US$17 million) annually as remuneration, but instructed his close aide Greg Kelly - a former Nissan representative director who was arrested along with Ghosn for alleged conspiracy - to submit that he earned 1 billion yen (US$8.8 million) a year in securities reports.

The move was apparently aimed at fending off criticisms from shareholders and investors that the amount is too high. Ghosn intended to receive the remaining 1 billion yen after retirement, according to the sources.

Kelly, who also denies there was a need to list the remuneration, has told investigators that the payment was intended to keep Ghosn tied to Nissan even after his retirement, the sources said.

Other sources have said earlier that Ghosn has made a document that shows Nissan had agreed on the post-retirement payment, which was shared with a limited number of senior officials, including Kelly. The prosecutors have seized the paper.

Ghosn told investigators that he has let Kelly be in charge of what to write in the financial statements and that he heard from Kelly the reports’ contents were legitimate.

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The Financial Instruments and Exchange Act says that remunerations should be disclosed in the financial year when it is fixed even if the actual payout is planned in the future.

Ghosn is also suspected of having used one of Nissan’s business jets for private trips, the sources said.

The 64-year-old is believed to have travelled aboard one of Nissan’s leased planes for nonbusiness purposes.

The business jet, which was dedicated to Ghosn, flew to countries where the carmaker has no major bases. The destinations included Beirut, the capital of Lebanon, where Ghosn allegedly made use of a residence the Nissan group had spent several hundred million yen to purchase, the sources said.

When the home was renovated four or five years ago, Ghosn was seen visiting the site almost every month.

According to a private website that shows flight routes of planes around the world by capturing their flight signals, the Nissan jet has flown to Lebanon several times since last month.

When Ghosn was arrested upon his arrival at Tokyo’s Haneda airport on November 19, the jet came from Lebanon.

The plane, manufactured by Gulfstream Aerospace Corp. and bearing the sign “N155AN,” is a high-end model priced at billions of yen, boasting one of the fastest and longest distance flight capabilities of a business jet.