Japanese prosecutors indict Ghosn, Nissan over underreporting of pay

11, Dec. 2018

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TOKYO, Kyodo - Former Nissan Motor Co. Chairman Carlos Ghosn, his close aide Greg Kelly and the Japanese automaker were indicted Monday over an alleged underreporting of about 5 billion yen ($44.5 million) of Ghosn's remuneration in the company's financial statements during the five years through March 2015.

Ghosn and Kelly were also served fresh arrest warrants the same day for continuing the misconduct through March 2018, a move which may lead to up to an additional 20 days of detention through Dec. 30 and sparking further criticism from overseas over what is viewed as harsh treatment of the once-admired businessman.

Ghosn, 64, who is credited with having rescued Nissan from near-bankruptcy in the 1990s, was arrested by prosecutors on Nov. 19 on a charge of violating a financial law by making misstatements in the reports for the five fiscal years from fiscal 2010.

Kelly, a 62-year-old former Nissan representative director, was also arrested along with Ghosn for conspiracy.

Japanese law sets detention limits for a suspect of 22 days for an arrest warrant served by prosecutors. The deadline for the two executives' initial detention period is Monday, but a fresh arrest warrant would allow the prosecutors to keep them in custody at a Tokyo detention center for a longer period and conduct further interrogation.

In total, Ghosn is suspected of having failed to report around 9 billion yen of his pay.

Japan's securities watchdog, meanwhile on Monday, filed a criminal complaint against Ghosn, Kelly and Nissan over the 5 billion yen of underreporting.

The detention of Ghosn and Kelly and their prolonged interrogation without the presence of a lawyer have sparked some criticism outside Japan.

While visits by people from outside the detention center are restricted, lawyers and embassy officials are allowed to meet them.

Ghosn and Kelly have admitted to the prosecutors that the former chairman's remuneration was not entirely stated in the reports, but have claimed that it was not necessary to do so because how much he would receive after his retirement had yet to be settled, according to sources with knowledge of the investigation.

The prosecutors believe the payments were fixed as they have obtained documents on his post-retirement compensation signed by Ghosn.

Nissan CEO Hiroto Saikawa was also found to have signed documents on post-retirement payments crafted by Kelly. The prosecutors have questioned Saikawa on a voluntary basis, believing he knows why and how they were created.

Ghosn has told the prosecutors he did not report the full amount because he did not want company workers to become unmotivated after learning about his high pay package, according to the sources. (Kyodo)