Executive accused of underreporting his income by tens of millions of pounds

This article is more than 1 year old

This article is more than 1 year old

Prosecutors in Japan have charged the former Nissan chairman Carlos Ghosn with underreporting his income by tens of millions of pounds, as the fallout from the scandal threatened to engulf other senior executives.

Ghosn, whose arrest on 19 November rocked the Japanese car industry and cast doubts over the future of Nissan’s alliance with Renault, is facing another 20 days in detention after prosecutors added to the charges against him and another Nissan executive, Greg Kelly.

With Kelly’s help, Ghosn, who was sacked as Nissan chairman days after his arrest, allegedly hid about 5bn yen (£35m) in income over a five-year-period up to March 2015.

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But on Monday, prosecutors served fresh arrest warrants alleging that the pair continued to underreport Ghosn’s income through to March this year, increasing the overall amount by 4bn yen.

Both men could remain in custody at least until the end of the month, a move that could add to international criticism of the aggressive tactics being employed by Japan’s powerful public prosecutors.

The scandal took a further twist on Monday when prosecutors also indicted Nissan for filing false financial statements, in what some described as a shift in focus towards Hiroto Saikawa, the firm’s chief executive and an outspoken critic of Ghosn’s management methods.

Nissan will find it difficult to avoid blame for the scandal, given the possibility that other executives had knowledge of Ghosn’s misconduct or that the firm’s internal controls failed to spot the misreported income.

“Normally, if it’s falsifying the financial filings, the company as well as the perpetrator is charged. That’s not surprising. It’s to be expected,” said a lawyer and former prosecutor, Nobuo Gohara. “Now suddenly the issue of CEO Saikawa becomes bigger. It becomes difficult to overlook Saikawa’s role in all of this. That becomes the main focus now.”

Nissan said in a statement that it “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.”

It added: “Nissan will continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information.”

Ghosn, 64, was once hailed as a saviour after he rescued Nissan from near-bankruptcy 20 years ago. The allegations aside, he is also alleged to have misused company money to fund his lavish lifestyle, including luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam.

Ghosn and Kelly have not issued statements during their detention, but media reports said both men have denied the allegations. Ghos faces up to 10 years in prison if found guilty. On Monday, the Brazil-born Frenchman was beginning his fourth week alone in a tiny cell at a Tokyo detention centre.

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He has reportedly told embassy visitors he is being treated well but has complained of the cold and the rice-heavy diet. He spends his time reading books and news reports.

Kyodo news agency, citing investigative sources, reported that Ghosn said he had signed documents to defer part of his salary until after retirement. But he added that the amount did not need to be declared as it had yet to be definitively fixed.

He is thought to have been deferring part of his pay to avoid criticism of his high salary from employees and shareholders.