Ousted Nissan Motor Co. Chairman Carlos Ghosn is suspected of using a Nissan fund to reward an acquaintance who helped him deal with a personal investment that incurred a loss, sources said Saturday.
Ghosn allegedly paid $14.7 million to the Saudi Arabian acquaintance from Nissan’s “CEO reserves,” a fund pool intended for financing unexpected business operations not covered by the regular budget, they said.
The former Nissan chief, charged with underreporting his remuneration and who remains in detention, was served with a fresh arrest warrant Friday for transferring the private derivatives contract, which was incurring an appraisal loss of ¥1.85 billion ($16.6 million), to the Nissan account in a breach of trust.
The investment contract with Shinsei Bank was moved to Nissan after the bank sought additional collateral due to the swelling loss, the sources said.
The contract, which racked up losses during the 2008 global financial crisis, was later transferred back to Ghosn’s personal asset management firm with his acquaintance backing the transaction, the sources said. The $14.7 million payment was a reward for helping shift the contract back from Nissan by providing a credit guarantee, they said.
The bank initially opposed Nissan’s taking over the contract for fear of violating the law, but the transfer was later facilitated by a foreign executive of the bank who was on friendly terms with Ghosn, they said.
The former Nissan chairman did not have the automaker shoulder the investment loss after being told by financial authorities it would be illegal, Ghosn’s lawyer, Motonari Otsuru, has said.
According to investigative sources, Ghosn said he paid the acquaintance for undertaking work related to Nissan’s operation. He admitted to shifting the contract to Nissan but denied causing any loss to the company, the sources said.
Part of Nissan’s reserve fund was managed by an overseas subsidiary and practically controlled by Ghosn alone, according to the sources familiar with the transaction between Ghosn and the acquaintance.
The arrest warrant served Friday came as a surprise as he was thought to be nearing release on bail from the Tokyo Detention House, where he has been held since Nov. 19.
Questions had been raised by foreign media and legal experts about the prosecutors’ way of seeking to hold Ghosn in custody by relying on the same allegation of underreporting remuneration for two different periods in the securities reports for which the previous two arrest warrants were served.
The confinement of Ghosn, credited with saving the Japanese automaker when it was teetering on the brink of bankruptcy in the late 1990s, has sparked criticism from overseas over the possibility his detention could be legally prolonged indefinitely, and over the absence of lawyers during interrogations — which is normal in Japan.