(Bloomberg) -- Almost 24 hours after Carlos Ghosn’s shock arrest, details are emerging of the alleged financial transgressions that have the auto industry titan facing jail-time in Japan, throwing the car alliance that he built into turmoil.
Nissan Motor Co., one of three companies in the world’s biggest carmaking union, paid “huge sums” toward Ghosn’s residences in four cities around the world that weren’t justified by the business, Japanese broadcaster NHK said Tuesday. It also reported that Ghosn charged travel expenses for family vacations, amounting to tens of millions of yen, to a Nissan unit.
Elsewhere in the local media, a picture is developing of how Ghosn’s alleged violations of Japanese financial law may have come to light, with prosecutors reported to have entered into a plea-bargain with a foreign executive at Nissan.
Nissan’s shares closed down 5.5 percent in Tokyo, the biggest one-day decline since November 2016.
Prosecutors in Tokyo, where Ghosn was arrested Monday, have been publicly tight-lipped.
They have confirmed that the Nissan chairman -- along with representative director Greg Kelly -- was arrested for failing to declare some 5 billion yen ($44 million) in Ghosn’s income on Nissan’s official securities reports submitted over five years starting 2011. In the meantime, Ghosn and Kelly’s exact whereabouts remain unconfirmed and the timeline for when they may be charged is at this stage unclear.
From the carmakers to whose fortunes Ghosn is inextricably linked through this stewardship of the alliance, there hasn’t been much on the nature of the allegations either.
Nissan Chief Executive Officer Hiroto Saikawa declined to give details on what charges were expected against the two men in his impassioned late-night press conference Monday in Yokohama, outside of Tokyo, citing the ongoing criminal investigation. The board of Renault SA, where Ghosn is CEO, is scheduled to hold an emergency meeting Tuesday evening Paris time.
But some apparent details of the investigation have leaked via the Japanese media, where the allegations reported against Ghosn include:
- Nissan paid “huge sums” to provide Ghosn with residences outside Japan, according to a report by NHK, citing unidentified people
- Nissan didn’t disclose that it had provided Ghosn with the homes in its official securities reports to the Tokyo Stock Exchange; the residences, located in Rio de Janeiro, Beirut, Paris and Amsterdam, had “no legitimate business reason” and Ghosn wasn’t paying at least some of the rent
- NHK later reported that Ghosn may have kept some compensation approved by shareholders and intended for other executives
- A further report from the broadcaster said Ghosn charged expenses for family vacations to Nissan, amounting to "tens of millions of yen," or more than $100,000
- The Nikkei newspaper, citing unidentified people, said that Ghosn may have used money meant for investment purposes to buy real estate for himself via overseas units. Nissan CEO Saikawa said Monday that Ghosn had both understated his income and misused company funds, including expenses and investment funds
Nissan wasn’t available for comment on the reports when contacted by Bloomberg News, and attempts to obtain a response from Ghosn or his representatives were unsuccessful.
Airport Arrest
Questions have also emerged about the nature of the allegations and whether Ghosn’s removal was a coup d’état -- something Saikawa was quick to deny Monday evening.
Saikawa did admit that a whistle-blower was responsible for bringing the matter to light, and Japanese media reported Tuesday that prosecutors had agreed to a deal with an unidentified person at Nissan -- a non-Japanese executive working in the company’s legal department -- under a recently-introduced plea bargain system.
It would be only the second such deal under the system, introduced in June, which reduces or gives immunity for those cooperating with investigations.
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