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Underreported remuneration, illegal overseas transfers at center of Ghosn probe

In this June 22, 2018 file photo, Mitsubishi Motors Corp. Chairman Carlos Ghosn is seen at a reception following a shareholders' meeting in Tokyo's Minato Ward. (Mainichi/Masahiro Ogawa)

TOKYO -- With Tokyo prosecutors serving former Nissan Motor Co. Chairman Carlos Ghosn with new charges, the amount of underreported remuneration has jumped to a total of some 9 billion yen. All eyes are on the future of the probe as suspicions of asset misappropriation overseas come to the surface.

The special investigation unit of the Tokyo District Public Prosecutors Office has outlined a scenario in which Ghosn, 64, "created a system to hide a portion of his remuneration by receiving it after his retirement as chairman." In response to this, the former Nissan executive has confirmed a part of the allegations to be true, saying that there was in fact a plan in the works. However, he has argued that because it was still undecided whether he would actually receive the money in the future, he had no obligation to write the amount in financial documents, thereby absolving him of any wrongdoing.

According to the Financial Instruments and Exchange Act and other rules, executive remuneration to be stated on documents submitted to the Financial Services Agency are those "to be received that fiscal year, or are clearly expected to be received." Thus, the biggest question in the case will be whether or not the payment of post-retirement remuneration had been fixed.

As evidence to back up their claims, prosecutors have agreement documents created by the former chairman and others annually, which indicate the amount of money to be received in the future, and some are said to be signed by Ghosn himself. Still, Ghosn denies engaging in any illegal acts, saying that the figures were simply the amount he wished to receive.

Aoyama Gakuin University professor emeritus Shinji Hata, an expert on corporate accounting and information disclosure, said, "If Ghosn recognized that the money was part of his executive remuneration, then even if he were to receive it in the future, he was required to write the amounts down (in reports) each fiscal year."

However, professor Keisuke Matsuoka, an expert on the financial instruments act at Senshu University, cast doubt on the seemingly clear-cut case. "There is no precedent for administrative punishment for falsely stating executive remuneration, let alone criminal action," he said. "There are many ambiguities as to what constitutes false reporting and what doesn't. In the trial, the judge is likely to be cautious in handing down a ruling."

But with Ghosn rearrested on fresh charges, the focus has now shifted to whether the special investigative unit will shift to pursing charges for the "personal diversion" of Nissan assets and "improper use of company expenses" pushed into the spotlight by Nissan President Hiroto Saikawa.

In particular, Ghosn is suspected of using Nissan capital for personal trips or filling the pockets of family members and other actions. In addition, there also are suspicions that he made Nissan use funds funneled from Dutch Nissan subsidiary Zi-A Capital and tax haven firms to buy luxury estates in Lebanon and Brazil, which were then offered to Ghosn free of charge. The former chairman is denying the claims.

If the executive is found to have carried out these actions for his own personal gain or to cause damage to the company by infringing on Nissan's capital, there is a possibility that the crime of "aggravated breach of trust" under the Companies Act and other laws could be applied.

However, one top prosecutor commented, "It all occurred abroad, and that makes grasping the flow of funds no easy task," hinting that building a case against Ghosn looks to be difficult.

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

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