Prosecutors seen indicting Ghosn as soon as Monday, Nikkei says

Carmaker Nissan accused its former chairman Carlos Ghosn of understating income and misusing company funds.
Carmaker Nissan accused its former chairman Carlos Ghosn of understating income and misusing company funds.PHOTO: AFP

TOKYO (BLOOMBERG) - Japanese prosecutors are expected to indict former Nissan Motor chairman Carlos Ghosn as soon as next Monday (Dec 10), Nikkei reported, citing unidentified people.

Prosecutors also plan to indict Nissan as a company for breaching Japan's financial instruments and exchange act by making misstatements on securities reports, Nikkei reported. Former representative director Greg Kelly is also seen being indicted, the report said.

Representatives of Nissan and the Tokyo prosecutors' office were not available when contacted by Bloomberg News outside business hours.

Mr Ghosn was arrested Nov 19, and next Monday is the last day of his extended detention. Nissan, the carmaker he helped resurrect, accused him of understating income and misusing company funds. He has denied wrongdoing.

In a related development, Mr Ghosn drew up a 10 billion yen (S$121 million) incentive plan for the board of which nine billion yen was meant to go in his own pocket.

Under the plan, which wasn't adopted, Nissan was to issue stock options to directors that could be exercised for one yen each upon retirement, according to two people with direct knowledge of the investigation. On average, the shares have traded for more than 1,000 times that price over the past year, making the proposed options virtually equivalent to free shares.

The latest revelation is one of a number of purported attempts by Mr Ghosn to award himself lucrative post-retirement compensation. It is separate from the allegation that he failed to report eight years of deferred pay, which also amounted to about nine billion yen, the people said, or a 4.7 billion yen share-price-linked plan, called stock appreciation rights, that he planned to receive after retirement.

 
 
 
 

Mr Ghosn has denied wrongdoing regarding all of these programmes. The long-term incentive plan was cancelled in January 2017, and the stock appreciation rights would have expired in March 2019, according to other people with knowledge of Mr Ghosn's case.

Ejecting Mr Ghosn, who came to Nissan two decades ago and saved it from bankruptcy as part of a tie-up with French rival Renault SA, may seem an extreme response to alleged financial reporting failures. Still, the series of Mr Ghosn's financial machinations start to paint the picture of a man eyeing a big payout - at the expense of other board members and senior managers - and that contributed to his ouster, people familiar with Nissan's probe said.

Mr Ghosn discussed the stock-option plan with a small group of people, including Mr Kelly, who has also been arrested, as well as members of his secretariat, the people said. It was never presented to the board or to shareholders.

Mr Kelly claims Japanese regulators had approved his practice of not including Mr Ghosn's deferred pay in securities reports, according to Kyodo News. Neither man has been formally charged. Mr Kelly's lawyer didn't respond to an e-mail seeking comment.

A spokesman for Nissan declined to comment on the investigation into Mr Ghosn.

Mr Ghosn led the board in discussions of overall compensation to be paid out each year for all directors, including himself, the people said. Separately, he would write a memo to himself setting out deferred compensation to be paid to him in an unspecified way at some unspecified point in the future. He would then direct Mr Kelly to find a way to make the payments.

In some cases, the payment were to take the form of consulting contracts, or compensation for non-compete agreements after Mr Ghosn stepped down as Nissan CEO, according to people familiar with the investigation.

He never received any of the funds, according to the people.