Business / Corporate

Former Nissan Chairman Carlos Ghosn denies allegations against him: sources

Kyodo, JIJI

Carlos Ghosn, who was recently ousted as Nissan Motor Co. chairman after being arrested over an alleged understatement of his remuneration in securities reports, has denied the charge, sources said Sunday.

The ousted chairman has not commented publicly on the matter since his arrest last Monday by Tokyo prosecutors on suspicion of underreporting his pay package by around ¥5 billion ($44 million) for five years through fiscal 2014. He received nearly ¥10 billion during that period.

Greg Kelly, Nissan’s representative director, who was arrested the same day as Ghosn for alleged participation in a financial conspiracy, has also denied that Ghosn’s salary was falsely underreported in the company’s securities reports, sources said Saturday.

Kelly said that Nissan’s securities reports were properly written and that there were no problems with them, the sources said. It is also the first time for comments by Kelly to be made public since the two were arrested.

Top executives of Nissan, Renault and Mitsubishi Motors Corp. are expected to discuss how to run the three-way alliance when some of them hold a regular meeting in the coming week in the Netherlands, other sources familiar with the matter said.

While the regular meeting is for discussing coordination in production and product development, Nissan CEO Hiroto Saikawa and Mitsubishi Motors CEO Osamu Masuko will likely participate by video link to talk about matters related to the alliance, they said.

In the alliance, Renault owns a 43.4 percent stake in Nissan, which holds a 15 percent stake in its French peer but with no voting rights and 34 percent in Mitsubishi Motors.

Meanwhile, other sources said Nissan is preparing to file a damages suit against Ghosn over the alleged misappropriation of funds to buy homes abroad for personal use and cover private expenses.

The company is reviewing each case of alleged misuse of funds discovered by an internal probe that led to the arrests.

The Yokohama-based automaker is considering how to recover the funds Ghosn allegedly spent to buy residences in the Netherlands and three other countries as well as $100,000 of annual pay to his sister for an advisory service she never provided, according to the sources.

Nissan also believes Ghosn had the company pay for his family’s trips and dining.

Both Ghosn and Kelly were stripped of their posts at an emergency board meeting Thursday. A source familiar with the matter said Nissan aims to nominate a new chairman within a month or two, hopefully before its next board meeting slated for around Dec. 20.

Kelly rebutted that there was an intention to falsely represent Ghosn’s salary in the securities reports, saying he wrote the reports after consulting with company officials and not on Ghosn’s orders, according to the sources.

Ghosn’s arrest came after a small group, involving board members, clandestinely conducted an internal investigation starting this spring, according to other sources familiar with the matter.

The in-house investigation was triggered by a whistleblower report. Until then, although there had been some suspicion in the company of Ghosn misappropriating Nissan funds, he was so powerful that people were afraid to criticize him, according to the sources.

The 64-year-old Ghosn is also suspected of having tried to cover up a total of ¥8 billion in remuneration by underreporting his salary for eight years, according to other sources familiar with the matter.

Ghosn allegedly determined his remuneration as about ¥2 billion per year and underreported it by half, the sources said. The ¥8 billion was apparently intended to be paid to him after he stepped down as chairman and assumed a new position.

Ghosn is believed to have made his remuneration look smaller to avoid criticism from Nissan shareholders, the sources said.

The underreporting that allegedly continued in the following three years would bring the total amount of money covered up to around ¥8 billion, they said.

Nissan’s corporate auditors suspect that the company may have bought the residences for Ghosn through an overseas subsidiary that is not actually operating, those sources said.

The subsidiary is Zi-A Capital BV, based in Amsterdam. Nissan invested some ¥6 billion when it set up the subsidiary in 2010. Ghosn became a board member when it was established but resigned the following year.