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Nissan's Ghosn crisis

Prosecutors arrest Ghosn for fourth time

Ex-Nissan chief calls charges over alleged payment to Omani associate 'outrageous"

A vehicle believed to be carrying Carlos Ghosn leaves his residence in Tokyo on April 4.
A vehicle believed to be carrying Carlos Ghosn leaves his residence in Tokyo on April 4. (Photo by Akira Kodaka)

TOKYO -- Japanese prosecutors rearrested former Nissan Motor Chairman Carlos Ghosn on Thursday on suspicion of aggravated breach of trust concerning improper use of company funds to pay an Omani distributor.

This is the fourth time Ghosn has been arrested and comes just a month after he was released from a Tokyo jail on March 6. Prosecutors led Ghosn from his Tokyo residence early in the morning and took him to the prosecutor's office by car.

It is rare for the Tokyo District Public Prosecutors Office to rearrest someone who has been released on bail. Prosecutors may have felt the need to detain Ghosn as they investigate new allegations regarding the Oman payments, for which they are seeking cooperation from a number of Middle Eastern countries.

Ghosn's latest arrest is over the alleged transfer of about $15 million (2 billion yen) from a Nissan subsidiary to the Omani distributor, ostensibly for marketing expenses. Prosecutors claim that about $5 million of this money was then funneled to a bank account over which Ghosn had substantial control.

Ghosn apparently made payments worth 3.5 billion yen ($31.4 million at current rates) starting in 2009 to Suhail Bahwan Automobiles, an Omani distributor owned by an associate, according to sources. The money, categorized as sales promotion expenses, came from a discretionary CEO reserve during Ghosn's time in that role.

But documents reveal that Ghosn received a loan of roughly 3 billion yen from that associate at nearly the same time. 

Funds paid to the distributor from the CEO reserve are alleged to have been for Ghosn's personal use rather than sales promotions.

"My arrest this morning is outrageous and arbitrary," Ghosn said in a statement following the arrest. "It is part of another attempt by some individuals at Nissan to silence me by misleading the prosecutors. Why arrest me except to try to break me? I will not be broken."

Ghosn tweeted on Wednesday that he had planned to hold a news conference on April 11 to make his case. But by rearresting him, "the prosecutors have denied me that opportunity," Ghosn said.

"I am determined that the truth will come out. I am confident that if tried fairly, I will be vindicated," Ghosn added.

In an interview with Nikkei from his Tokyo detention center on Jan. 30, Ghosn said that the "CEO reserve is not a black box" and that officers signed off on the payments. Similar incentive payments from the CEO reserve to other regions are not being scrutinized, he noted.

Japanese prosecutors continued their investigation into Ghosn, who originally was arrested in November on suspicions of financial misconduct involving a failure to report about 9.1 billion yen in compensation scheduled to be paid after his retirement.

He was indicted on additional charges in January, accused of channeling about 1.28 billion yen from a Nissan subsidiary to a Saudi associate.

Ghosn is suspected of making similar transactions as head of Renault. The French automaker alerted prosecutors there to millions of euros in suspicious payments starting in 2011 made to a distributor in Oman, Le Figaro reported Monday. It said that the money did not come from marketing and sales expenses and much of it was subsequently channeled to a Lebanese company controlled by a Ghosn acquaintance.

A spokesperson for Ghosn released a comment on Tuesday, stating "the payments were not for anything aside from business. Mr. Ghosn and his family have not obtained any profits."

Nikkei staff writers Jada Nagumo, Wataru Suzuki and Eri Sugiura contributed to this report

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