News that Nissan can be sued next to Ghos adds a new wrinkle to the unfolding scandal. Photo credit: Reuters
TOKYO – Prosecutors are expected to be Nissan Motor Co. to charge as a legal entity, in addition to the deposed chairman Carlos Ghosn, because they allegedly violated the financial legislation of Japan, according to a report.
Nissan is reportedly accused of violating the Financial Instruments and Exchange Act for allegedly underreporting Ghosn's compensation for five years until the fiscal year ending March 31, 2015, the Nikkei reported on December 7 without identifying sources.
The allegations are expected on 10 December from the office of the prosecutor in Tokyo, along with formal charges against Ghosn and Nissan director Greg Kelly, the newspaper said.
Ghosn and Kelly have been detained in a detention center in Tokyo since their arrest of November 19 on suspicion of hiding tens of millions of dollars in deferred income, Ghosn promised. Both men have maintained their innocence and neither has been accused.
A Nissan spokesperson responded to the report stating that the company had "identified serious misconduct in relation to the report of Mr. Ghosn's damages."
Nissan worked with researchers, he added.
A person familiar with the case said that Nissan had prepared for the accusations since the accusations against Ghosn and Kelly first arrived last month.
Prosecutors say that deferred compensation must be fully reported by Nissan in securities deposits, even though the amount has not yet been paid, because it was a future liability against the company, someone who is familiar with the case says. An internal probe by Nissan has identified approximately $ 80 million as unreported deferred reward promised to Ghosn, the person said.
News that the company can also be accused adds a new wrinkle to the unfolding scandal.
CEO Hiroto Saikawa apparently signed documents regarding plans to pay Ghosn's deferred compensation after he retired in the form of a consultant's fee, said the Nikkei.
But Saikawa apparently did not understand that the document was intended to set up deferred payments, and prosecutors believed that he was not involved in misleading registration files, he said.
Apart from that Ghosn added a new Japanese lawyer to his defense team.
English speaking attorney Go Kondo, who previously worked at the Boston Consulting Group, will complement Motonaru Ohtsuru, a leading former prosecutor. Ghosn also appealed to the American law firm Paul, Weiss, Rifkind, Wharton & Garrison.
Prosecutors are faced with two obstacles to the conviction of Ghosn, a former deputy in the special investigation unit of the prosecutor in Tokyo against the Shukan Shincho in Japan.
They have to prove that the amount and timing of future payments are definitive, Masaru Wakasa told the magazine. They must also demonstrate that under-reporting of the compensation is an "important issue" as required by law to constitute a criminal offense.
Defense lawyers will probably claim that the deferred compensation was still undecided and not an important issue, as it was not approved by the board, Wakasa said.
Yet Wakasa said that Ghosn has a chance of 60 to 70 percent to be condemned.
At the same time, Wakasa added, prosecutors may also choose to build up a case of aggravated breach of trust with Ghosn. That case would be based on accusations that he had misappropriated corporate funds for personal use, such as buying or renting houses. Nissan's internal probe claims that he has channeled money from Nissan through a subsidiary to pay for accommodation in Paris, Amsterdam, Rio de Janeiro and Beirut, according to a person familiar with the matter.
Naoto Okamura contributed to this report.