Carlos Ghosn allegedly shifted investment loss of ¥1.7 billion to Nissan; CEO Saikawa set to double as chairman

Ousted Nissan Motor Co. Chairman Carlos Ghosn is suspected of shifting some ¥1.7 billion ($15 million) of losses from personal investments to the automaker in 2008, adding to allegations of financial misconduct against him, sources said Tuesday.

According to the sources, the Securities and Exchange Surveillance Commission was aware of the alleged misconduct in relation to Ghosn’s derivatives trading and notified the bank involved in the transaction of the possibility that he had committed an aggravated breach of trust.

The SESC told The Japan Times on Tuesday it does not comment on specific cases.

Nissan shouldered the losses incurred amid the global financial crisis in 2008 after Ghosn could not secure adequate collateral, the sources said.

He was arrested last week for allegedly violating the Financial Instruments and Exchange Act by underreporting his remuneration by around ¥5 billion over five years to March 2015. He received nearly ¥10 billion from the firm during that period.

According to the sources, the former Nissan chairman admitted not having included in the securities reports part of the remuneration he was set to receive when he retires.

“There is no need to include them as their payments have not been settled,” Ghosn was quoted by the sources as saying.

Ghosn is also suspected of using one of Nissan’s business jets for private trips, the sources said. The 64-year-old allegedly traveled aboard one of Nissan’s leased planes for nonbusiness purposes.

The jet, which was set aside for Ghosn’s dedicated use, flew to countries where the automaker has no major bases. Destinations included Beirut, where Ghosn allegedly used for free a residence the Nissan group spent several hundred million yen to purchase, the sources said.

After the home was renovated four or five years ago, Ghosn reportedly visited the site almost every month.

According to a private website that shows routes of planes around the world by capturing their flight signals, the Nissan jet has flown to Lebanon several times since last month. The jet traveled from Lebanon on Nov. 19, when Ghosn was arrested upon his arrival at Tokyo’s Haneda airport.

The plane, manufactured by Gulfstream Aerospace Corp. and bearing the registration number N155AN, is a high-end model priced in the billions of yen and boasts one of the fastest and longest distance flight capabilities available in a business jet.

Ghosn was ousted as chairman last week by the Nissan board of directors along with Greg Kelly, a former Nissan representative director, who is suspected of conspiring with Ghosn.

Nissan plans to appoint CEO Hiroto Saikawa to double as its chairman at a board meeting next month, sources with knowledge of the situation said Tuesday.

The board plans to meet Dec. 17, the sources said, where three independent directors will nominate a candidate for chairman from among the six other directors. Ghosn and Kelly remain on the board.

Saikawa had been slated to be named Nissan’s chairman on an interim basis at an emergency board meeting Thursday but the plan has been put on hold over concerns that it would anger alliance partner Renault SA, of which Ghosn is still chairman and CEO.

The leadership vacuum increasingly appears to be turning into a power struggle.

Both Ghosn and Kelly are currently in detention but have yet to be charged. They have denied the allegations against them, according to investigative sources.

The Wall Street Journal reported Monday that Ghosn has concluded a contract with renowned U.S.-based law firm Paul, Weiss, Rifkind, Wharton Garrison LLP. The firm representing major U.S. financial institutions will defend Ghosn against allegations of financial misconduct in Japan, the newspaper said. Details of the firm’s role are unknown.

Brad Karp, chairman of the law firm, and Michael E. Gertzman, a partner of the firm, will take charge of Ghosn’s case, according to The Journal.

Meanwhile, the Tokyo Stock Exchange plans to probe Nissan over alleged financial misconduct by the former chairman, according to informed sources.

The TSE will examine the matter in detail, including Nissan’s internal management system, based on the exchange’s listing rules. It also plans to conduct hearings with Ernst Young ShinNihon LLC, the automaker’s auditor.

French Finance and Economy Minister Bruno Le Maire has said he believes it is preferable for the tripartite alliance to continue to be led by a person from Renault.

Ghosn, sent to Nissan from Renault as chief operating officer in 1999, turned around the Japanese automaker’s fortunes, dragging it from the brink of bankruptcy through drastic cost-cutting measures.

Renault, which owns 43.4 percent of Nissan, is expected to push for one of its own executives, rather than Saikawa, to succeed Ghosn. Nissan holds a 15 percent stake in the French automaker and a 34 percent stake in fellow alliance member Mitsubishi Motors Corp.

Japanese industry minister Hiroshige Seko told a news conference Tuesday that the government will not comment on the makeup of Nissan’s new management team, given that it is not a shareholder of the company.

On Monday, the board of Mitsubishi Motors also voted unanimously to dismiss Ghosn as its chairman.

The Brazilian-born executive, who also holds Lebanese and French citizenship, is also suspected of having used company funds to purchase and renovate lavish homes spread across four countries, and to have shifted ¥1.7 billion in personal investment losses to Nissan, according to the sources.

Line Corp. CEO Takeshi Idezawa speaks during an event in Tokyo on Tuesday.Image Not AvailableU.S. President Donald Trump (right) walks with Chinese President Xi Jinping during a welcome ceremony at the Great Hall of the people in Beijing last November. Trump is to meet with Xi at the Group of 20 summit in Buenos Aires on Friday and Saturday.

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