Japanese prosecutors indict Ghosn, Nissan for understating pay: Kyodo

In addition to charges against former Nissan chairman Carlos Ghosn, prosecutors have also indicted Nissan.
In addition to charges against former Nissan chairman Carlos Ghosn, prosecutors have also indicted Nissan.PHOTO: REUTERS

TOKYO (BLOOMBERG) - Japanese prosecutors indicted Carlos Ghosn on Monday (Dec 10) for understating pay, Kyodo reported, three weeks after his arrest at a Tokyo airport and bringing to a head the case that has sent shock waves through the global auto industry.

The prosecutors also indicted Nissan Motor, the report said. Former Nissan representative director and Ghosn's close aide Greg Kelly was also indicted, it said.

An indictment takes the prosecutors’ pursuit of Ghosn to the next level, while representing a victory for Nissan chief executive officer Hiroto Saikawa who has emerged as a driving force into the investigation into Ghosn’s alleged wrongdoing.

Ghosn is in custody in Japan after his Nov 19 arrest on allegations of under-reporting his income at Nissan, which has since ousted him as chairman.

While he remains at the helm of Renault, Nissan’s partner in the world’s biggest auto alliance, he has been replaced on an interim basis. Tension within the Franco-Japanese partnership that has been held together by Ghosn for two decades has all but exploded into the open since his shock incarceration.

Here’s how Ghosn’s legal process could play out: After indictment, Ghosn is likely to remain in custody as prosecutors continue to investigate additional suspected crimes.

A trial typically takes place about 40 to 50 days after indictment. Ghosn’s trial is likely to take place at the Tokyo District Court or a similar tribunal, where cases are argued in front of three judges.

Should he want to, Ghosn is likely to be able to appeal against the verdict twice, first to high court and then supreme court.

If convicted, Ghosn could face up to 10 years in prison, prosecutors have said.

Japan has one of the highest criminal conviction rates in the world, and prosecutors typically try to use interrogations to extract signed confessions from defendants.

In 2017, fewer than 1 per cent of cases in Japan’s district and county courts resulted in a not-guilty verdict or the defendant being released, according to prosecution data.

GROWING DISTRUST

Nissan, which Ghosn helped resurrect by uniting it with Renault in an alliance almost two decades ago, conducted a months-long probe into Ghosn’s financial reporting and alleged misuse of company assets.

The timing prompted some analysts to say the scandal may have been manufactured in order to block a merger that Ghosn was advocating between Nissan and Renault.

 
 
 

Mr Saikawa and other Japanese executives within Nissan have spoken strongly against a merger. 

Mr Saikawa, a former protege of Ghosn’s, is now potentially succeeding him as Nissan’s chairman after already taking over as CEO last year. Ghosn remains the chairman of the Amsterdam-based Renault-Nissan-Mitsubishi Motors Corp alliance.

Renault appeared to have been blindsided by Ghosn’s arrest and the allegations that have drifted out.

Executives are suspicious of Nissan’s motives, demanding to see proof from the Japanese carmaker of the accusations against Ghosn, people familiar with the matter have said.

Nissan offered up a presentation summarising his alleged transgressions, but Renault declined, requesting the presence of lawyers and the full report on the allegations, the people said.

A spokesman for Renault said Nissan still hasn’t provided the evidence Renault’s board has asked for. He declined further comment. 

Renault is aiming to reach in about a week the first conclusions of its internal probe into whether the pay packages of Ghosn, along with the French carmaker’s other top managers, were properly disclosed to shareholders, the people said.

Renault and Nissan have complicated cross-shareholdings, and poor relations would make operations difficult. 

The French carmaker is the largest shareholder in Nissan and has voting rights, while the Japanese company is the second-largest shareholder in Renault, with no votes. Nissan is keen to achieve a more equal power balance but its demands have been stonewalled by Renault and the French state.