Carlos Ghosn Faces New Charges in Japan as Pressure Mounts


TOKYO — Japanese prosecutors brought fresh charges of financial wrongdoing on Friday against Carlos Ghosn, the embattled global auto chief who sits in a Tokyo jail.

The new allegations raise the stakes in a showdown between Mr. Ghosn, until recently the head of the vast car-making alliance of Nissan, Renault and Mitsubishi, and the prosecutors, who have been working in tandem with whistle-blowers inside Nissan. It also signals that prosecutors remain undeterred by Mr. Ghosn’s recent assertion of innocence in court.

Mr. Ghosn, his top aide Greg Kelly and Nissan are now charged with understating Mr. Ghosn’s income through March 2018, according to a statement from the Tokyo District Court. Mr. Ghosn was also charged with improperly transferring personal losses to Nissan’s books in 2008.

Mr. Ghosn has been detained since November, when prosecutors seized him shortly after his corporate jet touched down at a Tokyo airport. He was later indicted, along with Mr. Kelly and Nissan itself, on suspicion of withholding millions of dollars in income from Nissan financial filings between 2011 and 2015, when he was both chairman and chief executive of the company.

Now, Mr. Ghosn has been ousted as chairman by both Nissan and Mitsubishi, though he remains on Nissan’s board, throwing the alliance into turmoil. Hiroto Saikawa, Nissan’s chief executive and a one-time protégé of Mr. Ghosn, has rebuked his former boss, describing him as a “mastermind” of a long-running scheme to mislead financial authorities.

The auto executive has denied the allegations, declaring at his first appearance at a court proceeding on Tuesday that he had been “wrongly accused and unfairly detained based on meritless and unsubstantiated accusations.”

The next step is likely to be Mr. Ghosn’s lawyers applying for bail, which could happen as soon as Friday. Motonari Otsuru, Mr. Ghosn’s lead lawyer in Tokyo, has said that he would ask for Mr. Ghosn’s release on bail. But even Mr. Otsuru, who is a former top prosecutor, has speculated that the authorities will seek to deny bail and that the executive’s detention could stretch for months as the two sides head to court.

Mr. Ghosn’s continued detention has cast a critical light on Japan’s criminal justice system. Mr. Ghosn — who has been formally arrested three times, prolonging his detention — has faced interrogation without a lawyer, and has so far only been permitted to see diplomats or his Japanese lawyer.

On Thursday, Mr. Ghosn came down with a fever, his local counsel said, raising concerns over the 64-year-old executive’s health. Mr. Ghosn was allowed to rest for a day on advice from government doctors, and his temperature was back to normal Friday morning, according to an update from his defense attorneys.

Mr. Ghosn’s wife, Carole Ghosn, who has not seen her husband since his arrest, issued a plea on Thursday for more information on his condition.

“I am pleading with the Japanese authorities to provide us with any information at all about my husband’s health,” she said from Paris, where the couple maintains a home. “We are fearful and very worried his recovery will be complicated while he continues to endure such harsh conditions and unfair treatment.”

Mr. Ghosn and Mr. Kelly were initially indicted on charges of understating Mr. Ghosn’s earnings from April 2010 to March 2015 by half in securities filings. On Friday, prosecutors added charges that the two also understated Mr. Ghosn’s compensation by more than half between April 2015 and March 2018.

Across the entire period, the two are accused of understating Mr. Ghosn’s compensation by about $83 million. They say he reported compensation of 7.9 billion yen, or $73.2 million, compared with actual compensation of 17 billion yen, or $156.9 million.

Mr. Ghosn’s lawyers have argued that the deferred amounts were not fixed commitments and did not need to be disclosed. Mr. Kelly, who has been released on bail, has denied wrongdoing as well.

Mr. Ghosn is further accused of temporarily transferring investment losses he faced during the global financial crisis of 2008 onto Nissan’s books, which prosecutors say violates Japanese corporate law. His attorneys said the transactions were legitimate, were approved by the company’s board and didn’t lead to losses for the company.

The events have shaken foreign businesspeople in Japan, who have closely scrutinized both the accusations and the justification for keeping him in jail while the case proceeds.

Stephen Givens, an American corporate lawyer in Japan who has been following the case, said the charges hinged on what he called overly highly technical interpretations of Mr. Ghosn’s and Nissan’s intentions, and whether Nissan had guaranteed that the deferred compensation promised to the auto chief would be paid out.

In the case of the alleged transfer of losses, Mr. Givens said the prosecution appeared to be scrutinizing whether a board resolution approving Mr. Ghosn’s transactions was drafted in a sufficiently precise way.

“My God,” he said. “Whether you are in jail or not depends on those two issues?”

A bold corporate leader who had celebrity status in Japan for turning Nissan around nearly two decades ago, the Brazilian-born, Lebanese- and French-educated engineer presided until recently over a global auto empire selling more than 10 million cars a year.

Mr. Ghosn’s children have said they believe the accusations against him are part of a revolt within Nissan against a possible merger with Renault that could give the French manufacturer — and its largest shareholder, the French government — a more dominant role in the alliance.

On Thursday, Renault said that its own internal review of its executives’ compensation for 2017 and 2018 had uncovered no wrongdoing. The company is still reviewing executive pay for previous years, the French automaker said in a statement. Mr. Ghosn remains Renault’s chairman and chief executive.

In a separate statement, Nissan said its board had “re-emphasized its commitment” to the alliance with Renault and Mitsubishi at a meeting Thursday at Nissan’s headquarters in Yokohama. The automaker also announced a number of interim steps to bolster its corporate governance.

Source : Nytimes