Ghosn property deals may have led to arrest

November 20, 2018 08:38 CET

Nissan paid “huge sums” for Carlos Ghosn’s residences in four cities around the world where there were no business justifications, Japanese broadcaster NHK reported, as questions swirled over what led to the dramatic downfall of one of the world’s most recognizable executives.

Tokyo prosecutors confirmed Tuesday that the Nissan chairman, along with representative director Greg Kelly, was arrested for failing to declare some 5 billion yen ($44 million) in Ghosn’s income on Nissan’s securities reports submitted over five years starting from 2011.

Prosecutors didn’t give specifics of the allegations, and Nissan CEO Hiroto Saikawa declined to give details on the expected charges at his impassioned late-night press conference in Yokohama, outside of Tokyo, citing the ongoing criminal investigation.

But some details of the investigation have started to leak via the Japanese media. The allegations reported against Ghosn include:

• Nissan paid “huge sums” to provide Ghosn with residences outside Japan, according to a report by NHK which cited unidentified people

• Nissan did not disclose in its official securities reports to the Tokyo Stock Exchange that it had provided Ghosn with the homes, NHK said

• The residences, located in Rio de Janeiro, Beirut, Paris and Amsterdam, had “no legitimate business reason” and Ghosn wasn’t paying at least some of the rent.

Separately Nikkei, citing unidentified people familiar, said that Ghosn may have used money meant for investment to buy real estate for himself via overseas units. Saikawa said on Monday that Ghosn had both understated income and mis-used company funds, including expenses and investment funds

Nissan wasn’t available for comment on the reports when contacted by Bloomberg News, and attempts to obtain comment from Ghosn or his representatives were unsuccessful.

Airport arrest

Questions also emerged about the nature of the allegations and whether Ghosn’s removal was a coup d’état. CEO Saikawa was quick to deny that last night. Japanese media also reported that prosecutors had agreed to a deal with an unidentified person at Nissan under a recently-introduced plea bargain system.

It would be only the second such deal under the system, introduced in June, which reduces or gives immunity for those cooperating with investigations.

Separately, the Asahi newspaper, the first outlet to break the news, revealed footage of a private jet with the identification number N155AN being boarded by prosecutors shortly after landing at Tokyo’s Haneda airport Monday evening.

Ghosn is not seen in the footage, which show the jet’s blinds being lowered after suited men board the airplane. Ghosn’s exact whereabouts are still unconfirmed, and he can be held in custody for up to 23 days without being charged under Japanese law.

With investors having had hours to digest the news, Nissan’s shares fell as much as 6.5 percent in Tokyo when the market opened, the biggest intraday decline since November 2016. Analysts were cautious on the impact that the arrest would immediately have on Nissan’s day-to-day business, where Ghosn had already ceded much control after years at the helm.

The broader impact on the Nissan-Renault-Mitsubishi alliance remains to be seen, with shares in Mitsubishi Motor., the smaller Japanese automaker itself rescued by Nissan, falling the most since its emissions scandal came to light in 2016.

Japan’s industry minister Hiroshige Seko echoed comments by French officials, urging stability within the alliance.

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