Japanese prosecutors has officially charged former Nissan chairman Carlos Ghosn with financial misconduct, essentially for under-reporting his income. Both Ghosn and former representative director Greg Kelly were indicted for violating the Japan financial instruments and exchange act, namely for making false disclosures in five annual reports leading up to the fiscal year that ended in March 2015.
The authorities have also extended Ghosn’s detention for allegedly understating his income for three more years through March 2018, according to Reuters. An earlier report stated that Ghosn, the man commonly hailed as Nissan’s saviour when he took over as CEO in 1999, may have hid up to US$70 million worth of salary and benefits paid to him by the automaker. Greg Kelly, meanwhile has been accused of assisting.
Prosecutors have also charged Nissan, the automaker being indicted for filing false financial statements. The automaker said it took the situation extremely seriously. According to an official press statement, Nissan said:
“Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret.”
The report also added that Japan’s securities and exchange surveillance commission said the crime carried a fine of up to 700 million yen. The sum may be something that Nissan can easily manage, but the impact elsewhere may prove to be more difficult to handle.
According to analysts and legal experts, it could be difficult for Nissan and its CEO, Hiroto Saikawa, to avoid the fallout, with pertinent questions at present being whether other executives had knowledge of Ghosn’s misconduct and whether the company lacked the necessary internal controls.
Ghosn, aged 64, who rescued Nissan from near-bankruptcy 20 years ago is also alleged to have misused company money to fund his lavish lifestyle, including luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam.
Carlos Ghosn and Greg Kelly have not issued statements during their detention, but media reports said both men have denied the allegations. The former chairman will face up to 10 years in prison if found guilty.