Carlos Ghosn Held In Tokyo on Financial Misconduct Claims

Carlos Ghosn was recently ousted as chairman of Nissan Motor Company after an arrest over allegations that he lied about his earnings in a recent securities report.  He denies the charges and has not made any public comments regarding his arrest or the proceedings.

The arrest took place nearly a week ago, in Tokyo, specifically over his alleged underreporting of the value of his package. Apparently, the numbers show a disparity of $44 million over five years (through the fiscal year 2014).

Greg Kelly was also a Nissan executive arrested alongside Mr. Ghosn.  He defends Ghosn, saying that his remuneration had been discussed with other officials and paid out as it should be.  However, Japanese prosecutors claim that these two men conspired to understate Ghosn’s payment over the $68 million he had earned at Nissan over five years (starting in 2010).  Furthermore, the company has made other allegations regarding the misappropriated use of company money.

Apparently, Nissan formed a team of secret investigators, earlier this year, to look into any alleged financial misconduct by Ghosn. And this came at a time when he had earned quite the reputation in Japan for saving the struggling Nissan Motor Company.  This is important because Ghosn is of Brazilian, French, and Lebanese descent; an exotic mix that often results in charismatic, successful people.  In Japan, though, this mix is typically regarded as gaijin—which means “foreigner”—and that makes it harder for Ghosn to be welcomed into the corporate culture than a Japanese native.

Former Japanese vice finance minister, Eiskuke Sakakibara also adds that Ghosn was not only a respected head of the Nissan alliance but also of Renault.  Ghosn is still chairman of the French company, and he is actually still in control of the Nissan-Renault partnership. And Sakakibara advises it may have been Ghosn’s push for a full Renault-Nissan merger that served as the basis for his downfall (and not this alleged overpayment).

Currently, Ghosn is being held at a Tokyo detention center.  On Wednesday, prosecutors were successful in their application for extending his custody, adding ten days to his detention. In a separate issue, however, Nissan is looking into filing a civil damages suit against the former chairman over his expenses and his alleged use of company money to finance property purchases.

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