Nissan Motor Co. was found to have underreported about ¥150 million over the three years until the business year ending March 2014, The Yomiuri Shimbun has learned, in the latest revelation over former Chairman Carlos Ghosn’s alleged misappropriation of the automaker’s funds.
The Tokyo Regional Taxation Bureau has determined that a donation made to a university in Lebanon, the home country of Ghosn, 65, and other expenditures made during the three-year period were for Ghosn’s private purposes, and judged that they should not be considered company expenses that can be deducted from corporate income.
According to informed sources, Nissan is believed to have already revised its income tax return and paid the penalty tax, which amounts to tens of millions of yen. Nissan’s in-house investigation found that Ghosn had directed, or intended to direct, a total of about ¥15 billion in improper expenditures, including expenditures for private purposes. The tax investigation has substantiated part of this finding.
A seven-year statute of limitations applies to the right to collect national tax in the case of fraud such as falsification and concealment. For that reason, the tax bureau imposed the penalty tax in advance for the three years until the year ending March 2014. The bureau is continuing to investigate the period from the business year ending March 2015, meaning other misappropriations could be recognized in the future.
The in-house investigation found that Nissan donated over $2 million (about ¥216 million at the current exchange rate) to a university in Lebanon despite having no business-related reason for doing so. It also found that the company paid Ghosn’s older sister more than $750,000 (about ¥81 million at the current exchange rate) for “consultant work” across more than 10 years starting in 2003, despite doing no work for Nissan.
According to informed sources, Nissan recorded these costs as expenses of the secretarial office for three years until the year ending March 2014. They totaled about ¥150 million, of which the tax bureau determined that the several millions of yen paid to Ghosn’s older sister for consultant work during the period constituted hiding of income involving falsification and concealment because the commission fees were fictitious. As a result, Nissan was hit with a hefty additional tax.
Ghosn has been charged with violating the Financial Instruments and Exchange Law for underreporting of remuneration totaling about ¥9.1 billion and aggravated breach of trust for misusing Nissan funds for payments to an acquaintance in Saudi Arabia and a dealership in Oman, among other crimes. Ghosn denies all charges. None of the incidents of misappropriation targeted by the penalty tax are part of the case against Ghosn.
Nissan will refrain from commenting while the tax investigation continues, an official at the company told The Yomiuri Shimbun, adding that it plans to sue for damages and take other necessary steps to clarify that responsibility lies with the former chairman and others. Ghosn’s attorney said his client has nothing to answer for.