When then Nissan Motor Co. Chairman Carlos Ghosn allegedly provided an acquaintance in Saudi Arabia with a total of 14.7 million dollars (about 1.6 billion yen at current exchange rates), he did so in portions of 3 million dollars to 4.2 million dollars over four years from Nissan's so-called secret funds, The Yomiuri Shimbun has learned.
Prosecutors suspect that Ghosn, 64, divided the about 1.6 billion yen to make it easier to disguise as outsourcing costs, according to sources.
Ghosn was rearrested on Friday by the special investigation squad of the Tokyo District Public Prosecutors Office on suspicion of aggravated breach of trust under the Companies Law as he allegedly misused Nissan's money for private purposes.
In October 2008, when he was Nissan's representative director and chief executive officer, Ghosn allegedly transferred an appraisal loss of about 1.85 billion yen, which was caused by his private investment, from his asset management company to Nissan. In addition, he allegedly had about 1.6 billion yen sent from Nissan Middle East FZE, a consolidated subsidiary of Nissan based in the United Arab Emirates, to the acquaintance in Saudi Arabia from 2009 to 2012, causing damage to Nissan that led to Ghosn's rearrest.
According to the sources, Ghosn incurred appraisal losses in the wake of the collapse of U.S. investment bank Lehman Brothers and had transferred all the investment rights, including the losses, from his asset management company to Nissan. But as the Securities and Exchange Surveillance Commission saw the moves as being problematic, he returned the rights from Nissan to his asset management company.
In a series of actions, the acquaintance, who engages in investment activities in Saudi Arabia, helped Ghosn with his credit guarantee. Ghosn paid about 1.6 billion yen to a company of this acquaintance from secrets funds managed by Nissan Middle East. In doing so, Ghosn had the total sent in portions of 3 million dollars to 4.2 million dollars (about 330 million yen to 460 million yen at current exchange rates), the sources said.
Nissan established Nissan Middle East in 1994 as a wholly owned subsidiary in charge of sales activities in the region. The secret funds the subsidiary manages are called CEO reserves.
Nissan considers CEO reserves as funds to be used on the judgment of the CEO when payments are necessary in emergencies, such as relief for victims of disasters. However, there is the possibility that the funds have been a source of money for Ghosn's private use, according to the sources.
Ghosn denies these allegations, the sources said. Concerning the transfer of his losses, he told prosecutors that there was no actual damage to Nissan. As to the provision of the about 1.6 billion yen to his acquaintance, he told them that he outsourced business to the acquaintance so was using the money for Nissan. Prosecutors suspect that Nissan's secret funds are used as a reward for the acquaintance who cooperated in the credit guarantee for Ghosn.
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