The 14.7 million dollars (about 1.6 billion yen at the current exchange rate) then Nissan Motor Co. Chairman Carlos Ghosn allegedly provided in Nissan funds to a company of an acquaintance in the Middle East was done on the pretext of sales promotion among other such purposes, according to sources close to the case.
The special investigation squad of the Tokyo District Public Prosecutors Office believes that the acquaintance's company was not actually engaged in promotional activities and that the money was spent under fictitious pretexts to conceal misconduct.
Ghosn, 64, has already been indicted on charges of understating his remuneration in securities reports and rearrested on suspicion of aggravated breach of trust under the Companies Law, involving misappropriating Nissan funds for personal use.
When Ghosn was Nissan's representative director and chief executive officer, he allegedly transferred his personal investment loss to Nissan after his asset company incurred the appraisal loss of about 1.85 billion yen in October 2008 through a swap transaction contracted to Tokyo-based Shinsei Bank. From 2009 to 2012, Ghosn also allegedly had a total of 14.7 million dollars sent from confidential reserves managed by a Nissan subsidiary to the company owned by the acquaintance in Saudi Arabia.The prosecutors rearrested Ghosn on Friday on suspicion of causing damage to Nissan.
According to sources, at that time, the Securities and Exchange Surveillance Commission pointed out compliance issues regarding Ghosn's action, thus, he switched the contract including the appraisal loss back to his asset management company from Nissan. The acquaintance in Saudi Arabia cooperated in guaranteeing credit by another bank for the Shinsei Bank contract. The acquaintance is involved in investment activities in Saudi Arabia and has known Ghosn for 30 years.
Ghosn instructed Nissan Middle East FZE -- a Nissan subsidiary based in the United Arab Emirates and engaged in sales activities in the Middle East -- to remit 14.7 million dollars of confidential reserves managed by the company to the acquaintance's subsidiary. The remittance was divided from 3 million dollars to 4.2 million dollars (about 330 million yen and 460 million yen at the current exchange rate) per year over four years and sent to the acquaintance's company under such pretexts as special promotion expenses or branding expenses in Saudi Arabia. Allegedly, however, the company was not engaged in such activities and there was no reason to provide such a large amount of funds.
The confidential reserves are called CEO reserves and are said to be usable at the CEO's discretion to respond to sudden financial demands such as disaster consolation payments.
Although Ghosn admitted to switching the appraisal loss to Nissan, he denies the charges against him, claiming that he has caused no actual damage to Nissan. Regarding funding for the acquaintance, Ghosn said that he was entrusting his business to the acquaintance. He also said that the person worked hard to solve troubles between Nissan and dealers in Saudi Arabia, thereby the money was spent for Nissan.
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