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Nissan’s Ghosn to Be Indicted by Prosecutors as Soon as Monday

Bloomberg logoBloomberg 12/7/2018 Kae Inoue
Carlos Ghosn wearing a suit and tie smiling and looking at the camera© Bloomberg Carlos Ghosn

Three weeks after his arrest at a Tokyo airport, Carlos Ghosn is set to be indicted for financial crimes as soon as Monday, according to people familiar with the matter, bringing to a head the case that has sent shock waves through the global auto industry.

Prosecutors are also planning to re-arrest Ghosn on new charges not yet made public, said the people, asking not to be identified because the information is private. In the first sign of blowback from the scandal for Nissan, the carmaker is also set to be indicted for breaching Japan’s financial instruments and exchange act by making false statements on securities reports, the Nikkei newspaper reported.

An indictment takes the prosecutors’ pursuit of Ghosn to the next level. Ghosn is in custody in Japan after his Nov. 19 arrest on allegations of under-reporting of his income at Nissan, which has since ousted him as chairman. While he remains at the helm of Renault SA, Nissan’s partner in the world’s biggest auto alliance, he has been replaced on an interim basis. Tension within the Franco-Japanese partnership that has been held together by Ghosn for two decades has all but exploded into the open since his shock incarceration.

Representatives of the Tokyo prosecutors’ office declined to comment.

Nissan “identified serious misconduct related to the reporting of Mr. Ghosn’s compensation,” the automaker said in an emailed statement. “The company has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with its investigation. We will continue to do so.”

Former representative director Greg Kelly, who is accused of aiding Ghosn in understating his income and misusing Nissan assets, is also set to be indicted, Nikkei said.

Monday is the last day of Ghosn’s current detention period, which was already extended once. Nissan, which Ghosn helped resurrect by bringing it into the alliance, conducted a months-long probe into Ghosn, who has denied wrongdoing. If convicted, the car industry titan could face up to 10 years in prison, prosecutors have said.

Those indicted in Japan may be allowed to leave on bail to await trial. However, if Ghosn is re-arrested and detained for further questioning, he is likely to be denied the chance for bail. Every re-arrest gives prosecutors a right to detain the suspect for 10 days, a period which may then be extended by another 10 days.

Ghosn’s Jail Time May Stretch to Months in Japan’s Legal System

Ghosn’s re-arrest would be based on suspicions he under-reported his income for the past three fiscal years, the people said. Prosecutors have thus far suspected him of doing so for the five fiscal years ending in March 2015.

Growing Distrust

Renault appeared to have been blindsided by Ghosn’s arrest and the allegations that have drifted out.

Executives are suspicious of Nissan’s motives, demanding to see proof from the Japanese carmaker of the accusations against Ghosn, other people familiar with the matter said earlier. Nissan offered up a presentation summarizing his alleged transgressions, but Renault declined, requesting the presence of lawyers and the full report on the allegations, the people said.

A spokesman for Renault said Nissan still hasn’t provided the evidence Renault’s board has asked for. He declined further comment. Renault is aiming to reach in about a week the first conclusions of its internal probe into whether the pay packages of Ghosn, along with the French carmaker’s other top managers, were properly disclosed to shareholders, the people said.

Renault and Nissan have complicated cross-shareholdings, and poor relations would make operations difficult. The French carmaker is the largest shareholder in Nissan and has voting rights, while the Japanese company is the second-largest shareholder in Renault, with no votes. Nissan is keen to achieve a more equal power balance but its demands have been stonewalled by Renault and the French state.

Renault has two representatives on Nissan’s board, which on Tuesday failed to name a new chairman to replace Ghosn.

Renault’s interim leadership could last a couple of months unless Ghosn is found guilty, or serious allegations against him are uncovered, one of the people said. The company named Thierry Bollore as interim CEO and the duties of chairman are being performed by director Philippe Lagayette. Ghosn remains the chairman of the Amsterdam-based Renault-Nissan-Mitsubishi Motors Corp. alliance.

--With assistance from Ma Jie and Ania Nussbaum.

To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Ville Heiskanen, Lena Lee

For more articles like this, please visit us at bloomberg.com

©2018 Bloomberg L.P.

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