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Prosecutors: Nissan’s Ghosn understated pay by ¥5 bil.

Ghosn is currently under arrest for financial discrepancy and under-reporting pay.


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Updated: November 21, 2018

Nissan Motor Co. Chairman Carlos Ghosn, arrested Monday on suspicion of falsifying the company’s securities reports, allegedly understated his remuneration by about ¥5 billion (about $44.4 million) over a five-year period.

The special investigation squad of the Tokyo District Public Prosecutors Office on Monday arrested Ghosn and Greg Kelly, representative director of the Yokohama-headquartered automaker, on suspicion of violating the Financial Instruments and Exchange Law. The squad also searched the company headquarters.

Later in the evening, the automaker said it plans to dismiss Ghosn and Kelly.

According to an announcement by the special investigation squad, Ghosn received remuneration of about ¥9.998 billion over five years from the business year ending in March 2011. However, authorities allege that Ghosn colluded with Kelly to submit securities reports to the Kanto Local Finance Bureau falsely stating that his remuneration over the period was about ¥4.987 billion.

From the business year ending in March 2010, executives of a listed company who receive annual remuneration of ¥100 million or more have been obliged to state their name, the amount of the remuneration and other data in securities reports.

Ghosn also is suspected of having had the company use part of the about ¥5 billion compensation understated in the securities reports to purchase property overseas.

Nissan announced Monday that it had uncovered “numerous other significant acts of misconduct” by Ghosn, such as personal use of the company’s investment funds and expenses.

According to Nissan and sources relevant to the case, the company learned about the misconduct by Ghosn and Kelly from a whistle-blower several months ago. Through an in-house investigation, the company discovered that several operating officers, among others, were allegedly involved in the misstatement of securities reports under Kelly’s direction.

Kelly, who is one of Nissan’s three representative board members, had reportedly ordered them to conceal portions of Ghosn’s remunerations.

“[Kelly] lives in the United States and rarely comes to Japan. It’s not really known what he does in the company,” a Nissan source said. In board meetings, Kelly attended via video and simply gave opinions.

As Ghosn’s closest aide, however, it is believed Kelly had a big influence on decisions related to executive personnel affairs and compensation. “Operating in the shadows of Ghosn’s leadership, he [Kelly] had control of the company,” President and Chief Executive Officer Hiroto Saikawa said at a press conference on Monday.

After receiving information from Nissan, the special investigation squad began an investigation and made plea bargaining deals with the executives suspected of being involved in the falsification under Kelly’s instruction. The deal will help the executives mitigate their criminal punishment in return for cooperating with the investigation by giving evidence of Ghosn’s and Kelly’s misconducts.

The punishment for falsifying a securities report is a prison sentence of up to 10 years, or a fine of up to ¥10 million, or both. The company could also face a fine of up to ¥700 million if dual liability is applied.

Ghosn’s annual executive compensation shown on Nissan’s securities reports stood around between ¥982 million and ¥1.04 billion from the business years ending March 2011 to March 2015. The figure exceeded ¥1 billion in the business years to March 2016 and March 2017, while the figure for the year to March 2018 decreased by 33 percent from the previous year to ¥735 million.Speech

 



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The Japan News
About the Author: The Japan News is published by The Yomiuri Shimbun, which boasts the largest circulation in the world.

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