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Nissan's Ghosn crisis

Ghosn says he told staff to handle pay reporting legally

Former Nissan chairman denies knowledge of illegal underreporting of compensation

Investigators believe Ghosn underreported his compensation by a total of about $70.4 million. 

TOKYO -- Arrested former Nissan Motor Chairman Carlos Ghosn has told prosecutors that he had instructed staff to legally handle matters regarding his compensation that was to be recorded in the company's securities reports, according to an investigative source.

The source said Ghosn, under interrogation by the Tokyo District Public Prosecutors Office, also said he entrusted the handling of his compensation reporting to Greg Kelly, a former Nissan representative director who is also under arrest on suspicion of playing a role in the pay underreporting by Ghosn.

Investigators suspect that Ghosn, in his capacity as Nissan chairman, underreported his compensation by a total of about 8 billion yen ($70.4 million), by deferring receipt of about 1 billion yen annually for eight years to the year ending March this year.

In response to this allegation, Ghosn said he had passed the handling of the compensation matter to Kelly and had instructed Kelly to handle it in a legal manner. Ghosn also said he was not aware of any illegality because Kelly, formerly a practicing attorney in the U.S., had explained that there was no problem about not recording the amounts in security reports, according to the source.

Kelly, for his part, has denied the allegations, saying there was no need to show the deferred amounts in the reports because Nissan had not approved payment of any of the amounts. Kelly also admitted to considering paying advisory fees to Ghosn after his expected retirement as chairman, but denied the intention to use this as a ploy to disguise deferred pay, as investigators suspect.

The former representative director also said he consulted with a person in charge at the company as well as external legal advisors and the Financial Services Agency about what to include in securities reports, the source said.

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