Tokyo: Japan was shocked by news that Nissan Motor Co chairman Carlos Ghosn, who was widely respected for rescuing the car maker from near bankruptcy, was arrested on Monday for alleged financial misconduct.
Nissan said that Ghosn, who is also chairman and CEO of Renault and chairman of Mitsubishi Motors, would be fired from his post as Nissan chairman on Thursday.
Nissan CEO Hiroto Saikawa told a packed press conference on Monday night that the company had found that Mr Ghosn had been using corporate money for personal purposes and under-reporting his income for years in official company filings to the Tokyo Stock Exchange.
Another board member, Greg Kelly, was also deeply involved in the misconduct, Nissan said. Saikawa said he couldn’t elaborate as the cases are being investigated by prosecutors, who have declined to comment.
Prosecutors said that Ghosn and Kelly conspired to understate Ghosn’s compensation over five years starting in fiscal 2010 as being about half of the actual 9.998 billion yen ($88.9 million).
Public broadcaster NHK said Nissan paid billions of yen to buy and renovate homes for Mr Ghosn in Rio, Beirut, Paris and Am-sterdam, citing unnamed sources. The properties had no business purpose and were not listed as benefits in TSE filings, NHK said.
Mr Ghosn, 64, has not been formally charged. The Asahi newspaper reported that he and Mr Kelly had submitted to prosecutors’ questions after getting off a plane on Monday afternoon at Tokyo’s Haneda Airport. Mr Saikawa confirmed they had been arrested.
Mr Ghosn and Mr Kelly have not been seen since and their exact whereabouts are not known. Suspects are typically taken to the Tokyo Detention Centre, which is link-ed to the Tokyo District Public Prosecutors Office.
Nissan’s Saikawa said Mr Ghosn’s alleged improprieties came to light through a whistleblower, after which the company began an internal investigation and informed prosecutors.
Japanese media reports say the informant is a member of Nissan’s legal department.
The Asahi reported, without citing sources, that the informant gave the prosecutors information in a plea bargain, implying the person may have provided evidence in exchange for a lighter sentence.
How could he pull off this alleged deception? This is the big question.
If the misconduct continued for years, as Saikawa said, analysts question how this could have passed undetected for so long, unless internal auditors and senior management turned a blind eye.
What next? Under Japanese law, a suspect can be detained by prosecutors for up to 20 days before being charged or released. Tsutomu Nakamura, a former prosecutor at the Tokyo Dist-rict Public Prosecutors office, predicted that Mr Ghosn will be indicted on Friday, December 7, the last working day before that maximum period.
Mr Ghosn is allowed access to a lawyer during his time in detention.
If bail is granted, it would be “exorbitant, in hundreds of millions of yen,” or millions of dollars, Mr Nakamura said. But in major cases like this, “often no bail is granted until after the arraignment at the first court session”.