Former Nissan Motor Co. Chairman Carlos Ghosn and former representative director Greg Kelly are at odds with prosecutors over whether they are required to state on securities reports remuneration to be paid to Ghosn after he resigns.
During his interrogation by the Tokyo District Public Prosecutors Office, Ghosn, 64, admitted that he gave instructions for part of his remuneration be paid after he steps down as executive, but denied this deferred payment was illegal, saying he was not obliged to state it on securities reports. Kelly, 62, Ghosn's closest aide, made the same assertion.
Ghosn and Kelly were arrested last month on suspicion of violating the Financial Instruments and Exchange Law by allegedly understating Ghosn's executive remuneration in Nissan's securities reports by about 5 billion yen from the business year ending March 2011 to the business year ending March 2015.
Prosecutors announced that Ghosn and Kelly, who are currently being detained in the Tokyo Detention House in Tokyo's Kosuge district, are being interrogated through an English interpreter. Their interrogations are being video and audio recorded.
According to investigative sources, Ghosn decided to receive about 1 billion yen of his about 2 billion yen in annual remuneration after he steps down as executive, following the introduction in the business year ending March 2010 of a system requiring executives to disclose their pay. He allegedly stated in Nissan's securities reports that he received only about 1 billion yen as annual remuneration.
Ghosn admitted to arranging to have the remuneration unstated in securities reports be paid after he retires. Allegations of unstated pay are what led to his arrest. He told prosecutors he thought shareholders would criticize him and [Nissan] workers would lose motivation if they knew he was receiving high remuneration.
Under the Financial Instruments and Exchange Law, remuneration to be paid at a later date must be stated in the securities report for the year when the amount is finalized. Therefore, whether Ghosn should be obliged to state his deferred remuneration in securities reports for a certain year depends on whether it was decided that year that he will receive remuneration after he retires and whether the amount of that remuneration was finalized.
The special investigation squad of the Tokyo District Public Prosecutors Office is giving particular weight to annual "memorandums" that were allegedly written by Ghosn and Kelly. It believes the memorandums provide proof they were obliged to state the deferred remuneration in securities reports.
According to prosecutors, the memorandums in question contain Ghosn's signature and the amount of pay he was to receive after he retires. Ghosn had the authority to determine executive pay.
According to prosecutors, Ghosn was shown these documents during his interrogation. However, he still asserts that his post-retirement remuneration was not finalized.
Kelly, meanwhile, told prosecutors that remuneration to be paid after Ghosn's resignation was not executive pay but consultant and other fees. He backs Ghosn's assertion, saying a specific method of payment had never been decided.
Criminal intent is also necessary to establish the charge of false statement on a securities report.
The special investigation squad believes it is possible to prove Ghosn acted with criminal intent, citing a cover-up attempt by Ghosn. It says Ghosn and Kelly arranged for Ghosn to receive part of his remuneration after his resignation on the pretext of the transfer of paintings to him, additional consultant fee payments and other means.
According to prosecutors, both Ghosn said Kelly deny criminal intent.
Ghosn said he asked Kelly, who is also a lawyer, to handle securities reports legally and was told by him that there is no legal problem. Kelly, meanwhile, said he consulted with outside lawyers and was told by them that there is no need to state deferred payments for Ghosn in securities reports.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
