(Bloomberg) -- The new indictment accusing Carlos Ghosn of redirecting $5 million from Nissan Motor Co. to his personal accounts not only may extend his time in detention, it also threatens to undermine his argument that he’s a victim of corporate intrigue.
Ghosn allegedly used foreign corporate entities in 2017 and 2018 to funnel the money into accounts that he controlled, Japanese prosecutors said Monday. He declared his innocence hours later. The allegations are the first to suggest that the former chairman — who also once led the alliance between Nissan, Renault SA and Mitsubishi Motors Corp. — transferred money from Nissan for his own gain.
After Ghosn’s first arrest in November, Nissan and Renault uncovered payments made through companies in Oman and Lebanon that allegedly were used for Ghosn’s personal benefit, including a yacht and his son’s startup. One company, Beirut-based Good Faith Investments, made money transfers to a firm connected to Anthony Ghosn, people familiar with the matter said.
“It sounds like, in this case, he in fact rerouted money from Nissan counterparties in Oman into accounts that he controls and he benefited from,” Stephen Givens, a professor of law at Sophia University in Tokyo, said after the indictment. “So this is real embezzlement, which is qualitatively very different from the things he’s been charged with up until now.”
Ghosn refuted the allegations in a statement Monday night and said prosecutors were “aided and abetted by certain Nissan conspirators.” Nissan shares fell less than 1 percent by midday in Tokyo Tuesday.
His previous proclamations of innocence –- including in a video aired after his latest arrest -- argued that Nissan executives either signed off on his actions or were conspiring against him because they feared losing their jobs if the company moved closer to Renault.
In their indictment Monday, prosecutors essentially undermined those claims by accusing Ghosn, 65, of acting out of greed to benefit his family.
Lawyers for Ghosn, who’s been detained since April 4 on allegations of misusing corporate funds, immediately applied for his release on bail. He has maintained his innocence of all charges filed against him since November, when his shock arrest jolted the auto industry and triggered sweeping changes at the three-company auto alliance.
Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, declined to comment on Ghosn’s request for release.
If these latest allegations against Ghosn are true, “obviously it would be more problematic than some possibly unintentional compliance violation, which is what they started with,’’ said Colin P.A. Jones, a law professor at Doshisha University in Kyoto.
Monday’s indictment came after Nissan filed a criminal complaint against Ghosn for allegedly using company funds “for his personal enrichment and were not necessary from a business standpoint.’’ Nissan’s statement isn’t a lawsuit against Ghosn, but rather a filing to prosecutors saying the company believes it was harmed by his misconduct and is calling for penalties, Nissan said in an email.
This new round of charges may keep Ghosn detained for an extended period while he tries to prepare for a trial that may start as soon as later this year.
After spending 108 days in jail following his November arrest on charges including filing false statements to regulators, Ghosn was released March 6 on bail of 1 billion yen ($9 million) and on conditions that he remain in Japan, submit to monitoring, and restrict his internet use.
He was arrested again April 4, a day after tweeting that he planned to hold a press conference to “tell the truth.’’
In a video made before that arrest but released April 9, Ghosn lashed out at Nissan’s top ranks for playing “a very dirty game’’ by orchestrating his arrests in Japan and his ouster from the auto alliance. He said some executives feared “the next step for the alliance in terms of convergence.’’
“This is about backstabbing,’’ Ghosn said in the video released by his lawyer, Junichiro Hironaka. Ghosn then named names in the video, but they were edited out before its release.
A day before his re-arrest, Renault said Ghosn made questionable payments to a distributor in the Middle East and an outside lawyer. Some expenses “involve questionable and concealed practices and violations of the group’s ethical principles,’’ the French carmaker said.
While Japanese authorities didn’t disclose the name of the distributor, an investigation by Renault and Nissan found payments made under Ghosn that allegedly went to Suhail Bahwan Automobiles LLC, Nissan’s exclusive distributor in the sultanate, according to people familiar with the matter.
Ghosn’s trips in and out of jail, prosecutors’ repeated extensions of his detentions and Ghosn’s minimal contact with defense lawyers have generated renewed scrutiny of Japan’s legal system, which has a near-perfect conviction rate.
The Center for Prisoners’ Rights said Ghosn’s case exposed “serious failings’’ with the system, and the UN Committee Against Torture previously expressed its concerns.
“What this case highlights and exposes is the power of the prosecutors’ office,’’ said Ashvin Chotai, managing director at Intelligence Automotive Asia in London. ‘‘The image of the Japanese legal system in the West has been severely tarnished.’’
(Updates with Nissan shares.)
--With assistance from Ichiro Suzuki and Kae Inoue.
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