Nissan’s Ghosn suspected of not reporting income from overseas unit

Nissan Motor Co.’s long-serving boss Carlos Ghosn is suspected of not stating in the automaker’s annual securities reports more than one hundred million yen ($ 886,000) worth of annual remuneration from a Dutch-based subsidiary, sources with knowledge of the situation said Wednesday.

Although the amount is much smaller than what the sources had a day earlier indicated he is believed to have gained from stock price-based compensation, Tokyo prosecutors allege the subsidiary played a pivotal role in the financial scandal that has erupted at the major Japanese automaker.

The sources said Tuesday that Nissan did not mention in the financial statements billions of yen Ghosn earned from stock appreciation rights, a scheme similar to stock options that gives bonuses to executives if the company’s share price rises above a certain level.

Ghosn, also chairman of Renault SA and Mitsubishi Motors Corp., was arrested by the prosecutors on Monday on suspicion of underreporting his pay package over five years from the business year ending in March 2011.

The amount of stock-related pay makes up much of the 5 billion yen in remuneration the prosecutors allege the 64-year-old understated during the period in violation of Japan’s Financial Instruments and Exchange Act.

The charismatic auto industry figure, who brought Nissan back from the brink of bankruptcy in the late 1990s, is also suspected of having used residences in Brazil, France, Lebanon and the Netherlands purchased by the subsidiary and other entities without paying rent and reporting that benefit as part of his compensation.

The prosecutors view the Brazilian-born chairman’s alleged receipt of income from the subsidiary and bonus scheme, as well as the benefit, should have been reported as part of his remuneration.

Believing that the Dutch-based subsidiary played a central role in the alleged misconduct, the prosecutors are investigating how it was set up and the extent of the involvement of Nissan representative director and close aide to Ghosn, Greg Kelly, who was also arrested on Monday, according to the sources.

An executive in charge of legal affairs under Kelly was involved in the purchases of the overseas residences, according to the sources.

Following a months-long internal probe triggered by a whistleblower report, Nissan said Monday that Ghosn’s «significant acts of misconduct» such as «personal use of company assets» and Kelly’s «deep involvement» were uncovered.

To carry out the high-profile investigation, the prosecutors have struck a plea bargain agreement with the executive.

Kelly, 62, is believed to have instructed the executive and other officials to make false statements in the Japanese automaker’s securities reports.

Nissan plans to dismiss Ghosn, who holds French citizenship, and Kelly, who was an attorney for a major U.S. law firm before joining the automaker in 1988, when it holds a board meeting on Thursday.

Mitsubishi Motors is expected to do the same next week, while Renault on Tuesday named its chief operating officer Thierry Bollore as acting CEO to lead the French manufacturer’s management on a temporary basis without ousting Ghosn.

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All — Kyodo News+

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