Ghosn may face longer detention as new allegations are made

December 4, 2018 09:30 CET

TOKYO — New details of Carlos Ghosn’s alleged financial misconduct are coming to light amid mounting speculation that the ousted Nissan chairman could be re-arrested by Japanese prosecutors and possibly detained through almost year-end as investigators probe new allegations.

Among the fresh accusations is that Ghosn’s total compensation in the 2016 and 2017 fiscal years pushed total director pay at the company above a cap set by shareholders.

That allegation came on top of earlier reports from Japan’s Asahi and Nikkei newspapers that Ghosn may have passed on personal losses of more than a billion yen ($8.8 million) from derivative trading to the Japanese automaker in 2008 during the global financial crisis.

Meanwhile, Japanese media say Ghosn could be re-arrested and have his detention extended yet again. Ghosn was arrested Nov. 19 and can be held for up to 22 days by prosecutors, after which period he must either be indicted or let go. But Japan’s legal system also allows for re-arrest on different charges, which enables prosecutor to detain suspects indefinitely.

Ghosn’s initial detention, itself extended twice, is set to end Dec. 10. But prosecutors are likely to re-arrest him amid suspicion he under-reported compensation for a period longer that previously investigated, Japan’s Asahi and Sankei newspapers said. That could set the clock all over again and keep Ghosn in confinement for another 20 days, through Dec. 30.

Prosecutors originally picked up Ghosn to scrutinize his alleged under-reporting of compensation in the 2010-2014 fiscal years. Now, they are looking at his reporting for the fiscal years 2015-2017. Nissan’s internal probe of the matter accuses Ghosn hiding some 9 billion yen ($79 million) in compensation over those eight years in a setup that would have him paid later.

During his interrogations, Ghosn has denied any wrongdoing, Japanese media say. Alleged co-conspirator Greg Kelly’s lawyers have likewise said their client did not break the law.

Among the fresh details, Ghosn is suspected of receiving 2.5 billion yen ($22.0 million) in total compensation – reported and deferred – over the two fiscal years through March 31, 2018. When combined with the compensation of the other directors, the total pay to all directors exceeds 3 billion yen ($26.4 million), the Nikkei reported. That would exceed a cap of 2.99 billion yen ($26.3 million) on total director pay set by shareholders at their annual meeting in June 2008.

A person familiar with the matter confirmed that, when including Ghosn’s un-reported remuneration, total director pay for both years is believed to have gone above the limit.

New chairman

The developments come as Nissan’s three outside directors reportedly met on Tuesday to begin the nomination process for Ghosn’s replacement as chairman of the board. A Nissan spokesman could not comment on media reports that the meeting was underway.

Nissan CEO Hiroto Saikawa had earlier said the three would be tasked with nominating a new chair from among the current directors.

A person familiar with the matter said the full board is scheduled to meet Dec. 17 to vote on a new chair. Nissan would still need to call an extraordinary shareholders’ meeting to vote on removing Ghosn and Kelly as directors. Kelly was also arrested Nov. 19 and is accused by Saikawa of being the “mastermind” behind Ghosn’s alleged scheme.

A shareholders’ meeting could happen as soon as early January, the person said.

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