Lebanese-raised car tycoon Carlos Ghosn charged with understating salary

Lebanese-raised car tycoon Carlos Ghosn has been charged with understating his salary.
3 min read
10 December, 2018
Ghosn is in a Japanese jail [Getty]

Franco-Lebanese-Brazilian executive Carlos Ghosn has been charged with financial misconduct after allegedly under-reporting his salary. 

The fresh warrant on separate allegations, meaning the Nissan chairman will likely spend Christmas in a cell.

He was arrested on 19 November on suspicion of under-declaring his income by some five billion yen ($44 million) between 2010 and 2015.

Prosecutors on Monday pressed formal charges on Ghosn - and key aide Greg Kelly - over this allegation, which both men are said to deny.

The pair were also immediately re-arrested over fresh allegations that they conspired to under-declare Ghosn's income by a further four billion yen over the past three years.

Under Japanese law, suspects can be re-arrested several times for different allegations, allowing prosecutors to question them for prolonged periods - a system that has drawn criticism internationally.

Monday was the final day prosecutors could hold Ghosn and Kelly, 62, before either charging or re-arresting them, and the fresh arrest gives them up to another 22 days of questioning.

In addition to charges against Ghosn and Kelly, prosecutors also indicted Nissan itself, as the company submitted the official documents that under-reported the income.

Nissan shares dropped 2.90 percent to 945 yen in Monday trading.

Ghosn is in a "combative" frame of mind, according to sources at Renault, the company he still formally leads - even if the French car giant has appointed an interim chairman.

The Japanese firms in the three-way alliance with Renault - Nissan and Mitsubishi Motors - have both sacked Ghosn as chairman.

Read also: The Lebanese origins of the world

But amid reports of tension within the tie-up, which outsold all rival groups last year, the three companies last month said they were "fully committed" to the alliance.

The millionaire auto sector star, who attracted some criticism for a perceived lavish lifestyle now lives in a tiny cell, which he has complained at being too cold.

Ghosn spends his time reading books and news reports and is said to be unhappy about the rice-based food.

Local news agency Kyodo said he admitted to signing documents to defer part of his salary until after retirement due to perceived criticism from staff and shareholders.

A source close to the investigation has said Ghosn and Kelly allegedly put the system in place after a new law came in obliging the highest-paid members of the firm to declare their salary.

Nissan is appealing to a court in Rio de Janeiro to block access by Ghosn's representatives to a luxury apartment on Copacabana Beach.

"We are closely watching if he is actually indicted and then found guilty," said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.

"If he is exempted from prosecution or found innocent, it is going to create huge confusion in Nissan's management," Takada told AFP.

In Japan, prosecutors and defendants begin a trial at a district court and can appeal to a high court and the Supreme Court. It may take several years before reaching a final judgement. 

If found guilty, Ghosn could face a 10-year prison sentence.

The affair represents a staggering fall from grace for a figure celebrated for saving Nissan from the brink of bankruptcy and rebuilding it as a money-making subsidiary of Renault.

Nissan has begun the process of choosing Ghosn's successor, with the final decision expected on December 17.

His arrest has sparked incredulity at Renault, which now owns 43 percent of Nissan and says it has not seen a detailed account of the charges against Ghosn.

It has also fueled anger in Lebanon, with digital billboards around Beirut proclaiming "We are all Carlos Ghosn" under a picture of the magnate.

"A Lebanese phoenix will not be scorched by a Japanese sun," Interior Minister Nohad Machnouk has declared.