Published: Tue, December 11, 2018
Markets | By Jeffery Armstrong

Nissan, Ghosn clash over Rio apartment filled with art, cash - filing

Nissan, Ghosn clash over Rio apartment filled with art, cash - filing

TOKYO: Japanese prosecutors Monday formally charged Carlos Ghosn with financial misconduct for under-reporting his salary and also served him a fresh warrant on separate allegations, meaning the tycoon will likely spend Christmas in a cell.

The details of his re-arrest are still unclear, but local media said it was possibly related to accusations of three additional years of under-reporting his income. The allegations newly reported on Monday would increase that amount by 4 billion yen ($36 million). Both Ghosn and former representative director Greg Kelly were indicted for violating the Japan financial instruments and exchange act, namely for making false disclosures in five annual reports leading up to the fiscal year that ended in March 2015.

In a statement, Nissan confirmed Ghosn and Kelly had been indicted, as well as admitting it too, as a legal entity, had been indicted: "Nissan takes this situation extremely seriously".

The auto company itself has also been charged - accused of making false statements in annual reports - according to the reports.

The arrest of Ghosn and Kelly also shook the foundations of the Renault-Nissan alliance. The new charges allow authorities to extend the detention of Ghosn and Kelly for further questioning.

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If convicted, Ghosn could face up to 10 years in prison, prosecutors have said.

Ghosn has apparently been detained in Tokyo since being arrested November 19 for allegations that he conspired with aide Greg Kelly to hide $44 million (5 billion yen) of compensation-around half of what he actually made-from 2010 to 2015. The allegations aside, he is also alleged to have misused company money to fund his lavish lifestyle, including luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam.

He was parachuted into Nissan and began a huge corporate overhaul when Renault acquired the then-ailing Japanese manufacturer in 1990.

Some Nissan executives have always been unhappy with what they see as Renault's outsized influence over the Japanese automaker, which dwarfs Renault in vehicle sales.

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

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Ghosn is seeking to retrieve "personal belongings, documents, cash, objects and art pieces" from the beachfront apartment, which Nissan says it owns.

He also denied that the two would be forced to make confessions. Fewer than 1 percent of cases in Japan's district and county courts resulted in a not-guilty verdict or the defendant being released in 2017, according to prosecution data.

The timing of the company's probe prompted some analysts to say the scandal may have been manufactured in order to block a merger that Ghosn was advocating between Nissan and Renault.

Relations had been strained between Saikawa and Ghosn for some time, the people who spoke to Bloomberg said, declining to be identified discussing private information.

Prosecutors are also planning to rearrest Ghosn on new charges not yet made public, said the people. Nissan is keen to achieve a more equal power balance but its demands have been stonewalled by Renault and the French state.

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