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Nissan's Ghosn crisis

Ghosn sought $30m Nissan loan to Saudi friend, say sources

Tokyo prosecutors prepare new indictment against auto executive on Friday

Carlos Ghosn's proposal to lend 3 billion yen from Nissan to a Saudi acquaintance's company was rejected for being too vague on key points.   © Reuters

TOKYO -- Former Nissan Motor Chairman Carlos Ghosn sought to loan about 3 billion yen ($27.7 million at current rates) from the automaker in 2009 to a Saudi businessman who then helped Ghosn cover losses on a currency hedging deal, sources familiar with the investigation said on Wednesday.

The revelation comes as Tokyo prosecutors prepare to indict Ghosn on the charge of breach of trust on Friday, when his current custody period ends. The Tokyo District Court on Wednesday rejected an appeal filed the previous day by Ghosn's lawyers against his lengthy detention.

At a court hearing on Tuesday, Ghosn rebutted the allegations against him and called the Saudi businessman, Khaled al-Juffali, a "longtime supporter and partner of Nissan." But prosecutors continue to look for evidence of a quid pro quo involving the misuse of Nissan money.

According to investigation sources, Ghosn talked with non-Japanese Nissan executives in late January 2009 about a possible loan to a business run by al-Juffali. Ghosn sought approval within Nissan for the loan, the sources said.

But documents circulated for approval, which have been seized by prosecutors as part of the investigation, did not designate one specific borrower, instead listing multiple companies operated by al-Juffali as well as "other recipients" as candidates. The purpose of the loan was described in similarly vague terms, the sources said, adding that the proposal did not pass the company's internal checks.

Ghosn faced 1.85 billion yen in paper losses on currency swap contracts with Tokyo-based Shinsei Bank when the yen soared after the September 2008 collapse of Lehman Brothers. After the bank demanded more collateral, Ghosn transferred the contracts to Nissan in October.

Ghosn moved the contracts back to his asset management company the following February after al-Juffali helped him secure a roughly 3 billion yen credit guarantee. The revelation that Ghosn proposed a loan to al-Juffali just a month before this has fueled prosecutors' suspicions of a connection to the credit guarantee, as well as to $14.7 million in payments made to Khaled Juffali Co. between 2009 and 2012 from Nissan's discretionary "CEO reserve."

Ghosn, in his statement on Tuesday, said that "Khaled Juffali Company was appropriately compensated -- an amount disclosed to and approved by the appropriate officers at Nissan -- in exchange for" important services that "substantially benefited" the automaker, he said.

Once charges are filed on Friday, Ghosn will be held in pretrial detention, under which he will be eligible for bail. His legal team plans to request bail the same day.

Ghosn has been kept in custody for more than 50 days owing to the risk that he could flee or destroy evidence, the court said at Tuesday's hearing.

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