November 21, 2018 09:07 CET
TOKYO — Tokyo District Court has decided that Nissan Chairman Carlos Ghosn and Representative Director Greg Kelly will be detained for 10 days, Kyodo News reported on Wednesday.
Ghosn was arrested on Monday after a Nissan internal investigation found he had allegedly engaged in years of wrongdoing, including personal use of company money and under-reporting earnings.
Japan’s legal system is opaque even to locals, and basic details of Ghosn’s location and immediate future are unknown, although he is likely at a detention facility in northern Tokyo. According to Japanese law, Ghosn can be held in custody for up to 23 days without being charged.
Bail cannot be granted until prosecutors decide whether to proceed with an indictment, a process that could take weeks, and Ghosn will not necessarily be joined by an attorney when he is questioned during that time.
Ghosn could face a maximum penalty of up to 10 years in prison and/or a fine of up to 10 million yen if convicted of financial improprieties in Japan under the country’s Financial Instruments and Exchange Act.
Prosecutors said Ghosn and Kelly, the first American to join Nissan’s board, conspired to understate Ghosn’s compensation on Nissan’s official securities reports over five years starting in fiscal 2010 as being about half of the actual 10 billion yen ($88.65 million).
More details of Ghosn’s alleged transgressions began trickling out in local media. Combined, they painted a picture of an executive who dipped into company funds to bankroll a lavish lifestyle, from luxury residences dotted around the globe to money funneled into investment funds and family vacations.
Japanese public broadcaster NHK said Nissan had paid billions of yen to buy and renovate homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unnamed sources. The properties had no business purpose and were not listed as benefits in compensation filings to the Tokyo bourse, NHK said.
Japan’s Nikkei business daily said on Tuesday that Ghosn had received share price-linked compensation of about 4 billion yen over a five-year period to March 2015 but that it went unreported in Nissan’s financial reports.
Ghosn may have received unreported funds from a Renault-Nissan venture based in the Netherlands amounting to about 100 million yen ($880,000) that was not mentioned in financial report, Nikkei said.
Ghosn hasn’t been seen in public and hasn’t responded to the allegations.
Nissan under scrutiny
Japanese prosecutors also are considering bringing a case against Nissan after Ghosn’s arrest, the Asahi Shimbun daily said on Wednesday.
The Asahi quoted unnamed sources as saying that the misstating meant the company also bore responsibility and that prosecutors were eyeing the possibility of putting together a case against it.
Prosecutors were not immediately able to comment. Nissan declined to comment on the report.
Ghosn is also chairman and CEO of Nissan’s French alliance partner Renault, and chairman of Japan’s Mitsubishi Motors, the third partner in the alliance.
Renault on Tuesday tapped its chief operating officer Thierry Bollore to fill in for Ghosn, but the board refrained from firing him while awaiting details on the allegations – a decision that could buy more time for an accelerated, permanent succession process.
More than Ghosn’s personal future is at stake. He had championed a push for Nissan and Renault to solidify their two-decade-old relationship by merging, a union that would create a direct rival to Volkswagen and Toyota for the title of the world’s largest automaker.
But Nissan CEO Hiroto Saikawa has publicly played down that prospect, and had harsh words for Ghosn, his one-time mentor, at a press conference on Monday. “This is an act that cannot be tolerated by our company,” he said, arguing that an excessive concentration of power in Ghosn’s hands created an environment ripe for misconduct.
Bloomberg contributed to this report
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