TOKYO -- Former Nissan Motor Chairman Carlos Ghosn has denied allegations that he underreported his compensation, sources say, while a new development has emerged in the scandal that led to his ouster.
Ghosn did not report roughly 8 billion yen ($70.8 million) in deferred compensation over eight years, sources say. He is believed to have arranged for about 1 billion yen a year to be paid to him later on, such as after he retired from the company, from fiscal 2010 to fiscal 2017.
Prosecutors apparently think he needed to cite this compensation in securities reports each year if the payments by Nissan were definite, even if he had not received the money yet.
In June 2008, Nissan decided at a shareholders meeting to cap total compensation to all directors at 2.99 billion yen per year. Sources say Ghosn received about 2 billion yen annually until 2010, when Japan required that securities reports disclose the pay for executives receiving at least 100 million yen yearly. Ghosn had the authority to decide compensation to each executive within the 2.99 billion yen cap.
Once that disclosure requirement took effect, Ghosn reportedly kept his compensation disbursed each year to roughly 1 billion yen to avoid criticism that he was receiving too much, deferring payment of the remaining 1 billion yen or so.
Former Representative Director Greg Kelly is accused of being one of the few people at Nissan who knew of this deferment. Documents found in Nissan's internal probe showed that this arrangement was not referred to the board of directors, so auditors likely did not notice because there was no movement of funds.
In addition to the alleged underreporting of cash compensation, Ghosn is accused of omitting from securities filings roughly 4 billion yen in stock appreciation rights received in the four years through March. Stock appreciation rights granted to other directors have been included in the securities reports.
Ghosn and Kelly were arrested Nov. 19 on allegations of understating Ghosn's pay in securities filings by about 5 billion yen for the five years through March 2015 in violation of Japan's Financial Instruments and Exchange Act. Ghosn has led the alliance linking Nissan, French automaker Renault and Japanese compatriot Mitsubishi Motors, a group that collectively sells over 10 million vehicles annually.
Ghosn was removed as Nissan chairman Thursday. Ghosn is expected to claim that he had no intention of reporting false information.
Separate from the 5 billion yen, Ghosn is suspected of failing to report about 3 billion yen received over three years through March.
Kelly also denies the allegations, arguing that compensation was reported appropriately, according to sources. He claims that Ghosn had not instructed him to take illegal actions.
Both Ghosn and Kelly are being held at the Tokyo Detention House.