Ghosn formally charged for financial misconduct, Nissan also indicted

Tuesday, 11 December 2018 00:00 - - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Tokyo prosecutors officially charged ousted Nissan Motor chairman Carlos Ghosn on Monday for under-reporting his income and extended his detention on suspicion of additional financial misconduct.

FILE PHOTO: Carlos Ghosn, chairman and CEO of the Renault-Nissan-Mitsubishi Alliance, attends the Tomorrow In Motion event on the eve of press day at the Paris Auto Show, in Paris, France - REUTERS

The prosecutors also indicted Nissan for filing false financial statements, making the Japanese automaker culpable for the scandal that has shocked the auto industry.

Ghosn was arrested on 19 November on suspicion of conspiring to understate his compensation by about half of the actual 10 billion yen ($88 million) over five years from 2010.

He has been held in a Tokyo jail since then for questioning, but had not been officially charged till now. Prosecutors also re-arrested him on Monday for allegedly understating his income for three more years through March 2018.

Nissan, which fired Ghosn as chairman days after his arrest, has said the misconduct was masterminded by the once-celebrated executive with the help of former Representative Director Greg Kelly, who was also officially charged for the first time on Monday.

Ghosn and Kelly have not made any statement through their lawyers, but Japanese media reported that they have denied the allegations. Calls to Ghosn’s lawyer, Motonari Otsuru, at his office went unanswered.

After its indictment was announced, Nissan said it took the situation seriously.

“Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret,” it said in a statement.

Japan’s securities watchdog, the Securities and Exchange Surveillance Commission, said the crime carried a fine of up to 700 million yen ($6.21 million).

Analysts and legal experts have said it could be difficult for Nissan and its Chief Executive Hiroto Saikawa to avoid the fallout, whether it turns out that other executives had knowledge of Ghosn’s misconduct, or that the company lacked internal controls.

Nissan has stepped up its offensive against the executive once credited for rescuing the company from near-bankruptcy.

The company said on Sunday that it was seeking to block access by Ghosn’s representatives to an apartment in Rio de Janeiro, citing a risk that the executive may remove or destroy evidence.

A Brazil court has granted Ghosn access to the property, owned by Nissan, in the Copacabana neighbourhood, but the company said in a statement that it was now petitioning a higher court to reverse the decision.

Nissan has also blamed Ghosn for a series of infractions including personal use of company funds. While not commenting on the possibility that other executives may have had knowledge or been involved in the wrongdoing, it has acknowledged a need to improve its governance.