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Part of remunerations for Nissan executives diverted to Ghosn

Carlos Ghosn

TOKYO -- A portion of remunerations for all board members of Nissan Motor Co. was allegedly diverted to chairman Carlos Ghosn, who was arrested by Tokyo prosecutors on suspicion of under-reporting his salaries by a total of some 5 billion yen, people close to the arrangement have said.

Nissan's shareholder meeting has approved about 3 billion yen per year as salaries for board members since 2010. However, the actual amount they received was around 1 billion yen less than the approved amount each year. Ghosn had the authority to decide how to distribute the approved remunerations, they said.

How much the majority of the other board members received from the leading automaker is not clear. Only those receiving 100 million yen or more per year are legally obligated to publicly state the amounts they received.

Meanwhile, Ghosn apparently had Nissan provide housing in his home country of Brazil, the Netherlands, France and Lebanon, according to individuals knowledgeable about the matter. Those apartments were bought by Nissan affiliate companies overseas, and Ghosn is suspected of not having paid the rent for some of the properties. The elite businessman thus allegedly inflicted damage to the company and potentially committed aggravated breach of trust.

However, prosecuting Ghosn for aggravated breach of trust is not easy, as doing so requires proving that he intended to make a profit out of the arrangement.

As for the country in which Ghosn paid income tax, Nissan President Hiroto Saikawa told a Nov. 19 press conference that he believed the globe-trotting chairman "paid in Japan."

Ghosn and Nissan representative director Greg Kelly were arrested on suspicion of teaming up to falsely report Ghosn's salaries at around 4.987 billion yen during a five-year period from fiscal 2010. The actual amount was 9.998 billion yen.

Tokyo prosecutors investigating the case struck a plea bargain deal with a person linked to Nissan who allegedly was involved in the false reporting to obtain the necessary information about the situation. The plea deal marks the second application of the legal arrangement since its introduction in Japan this June.

--- Ghosn apparently failed to report stock-based salary

Meanwhile, Ghosn apparently did not report several billion yen of remuneration linked to Nissan stock prices although he was given the right to receive the money, according to people familiar with the arrangement. This amount seems to be included in the unreported portion of his salaries, for which Ghosn was arrested.

According to these individuals, the option was called "stock appreciation rights (SARs)," and its introduction was approved at a meeting of the carmaker's shareholders in 2003. Under this SARs arrangement, the difference between the base price and increased amount is paid out in cash.

Ghosn has obtained the right to the SARs payment, but the amount of money he received through the program was not listed in his financial statement. Other board members included the amounts they received through SARs in their financial reports to the authorities. The Nissan chairman apparently refused to include the figure in his statement.

Nissan will hold a board meeting on Nov. 22 to decide whether to dismiss Ghosn as representative director and chairman. Kelly's dismissal is likely to also be determined at the session. Mitsubishi Motors Corp., where Ghosn also serves as chairman, will hold a board meeting next week to relieve him of his post.

(Japanese original by Kenji Tatsumi, Kazuhiro Toyama and Kim Suyeong, City News Department, and Toru Yanagisawa, Business News Department)

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