Less than a month ago, Nissan Chairman and CEO Carlos Ghosn and his aide, Greg Kelly, were detained by Japanese authorities on allegations of financial misconduct. Since then, Ghosn has been placed under arrest and incarcerated. On Monday, Tokyo prosecutors filed charges against Nissan, Ghosn and Kelly for misstating Ghosn’s compensation in company financial filings between 2010 and 2014.
Ghosn and Kelly were rearrested on new charges Monday and will continue to sit in jail for at least 20 more days. Under Japanese law, corporate entities also may be indicted, and that also happened today.
In a statement, Nissan said:
Representative Director and Chairman Carlos Ghosn and former Representative Director Greg Kelly were indicted for violating the Japan Financial Instruments and Exchange Act, namely making false disclosures in annual securities reports.
Nissan, as a legal entity, was also indicted for the same violation.
Nissan takes this situation extremely seriously. Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret.
Ghosn, Nissan and Kelly have been indicted on charges of violating Japan’s financial disclosure laws by under-reporting Ghosn’s compensation by about ¥5 billion ($44.4 million) in fiscal years 2010 through 2014. New charges leveled Monday allege under-reporting of Ghosn’s compensation for the years 2015 through 2017 by ¥4 billion ($35.5 million). The new charges will keep Ghosn and Kelly in detention without bail for up to 20 days, at which time they must be indicted again or released.
They also could be rearrested on additional charges and the cycle would begin again. Automotive News cites a 2002 case in which a former Japanese legislator was charged with bribery and held in detention for 14 months before being tried and ultimately convicted.
Japanese newspaper Nikkei reports that Ghosn and Kelly, if convicted, could each face up to 10 years in prison, a fine up to 10 million yen ($88,750) or both. Nissan could be fined up to 700 million yen ($6.21 million).
Kyodo News reports that Ghosn and Kelly have admitted that Ghosn’s compensation was not fully reported but argue that it was unnecessary because the amount of deferred compensation had not been decided. Under Japanese law, the prosecution must prove that the amount and timing of future payments are definite and that Nissan was required to report the payments fully in its financial statements.
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