Nissan's ex-chairman charged after accusation of underreporting pay

Tokyo prosecutors have charged Nissan, former chairman Carlos Ghosn and another executive for allegedly underreporting income.

Carlos Ghosn, 64, was ousted as chairman of the automaker after his arrest

Carlos Ghosn, ex-chair of Nissan, has been charged by prosecutors in Japan after being accused of substantially underreporting his income. (Kim Cheung/Associated Press)

Tokyo prosecutors have charged Nissan, former chairman Carlos Ghosn and another executive for allegedly underreporting income.

The charges imposed Monday involve allegations Ghosn's pay was underreported by about $44 million US over five years. The prosecutors said earlier that the allegations were behind Ghosn's Nov. 19 arrest.

The arrest of an industry icon admired both in Japan and around the world has stunned many and raised concerns over the Japanese automaker and the future of its alliance with Renault SA of France.

The prosecutors added a new set of allegations Monday against Ghosn and Greg Kelly, of underreporting another $36 million for more recent years. Nissan as a company was not mentioned in the latest allegations.

In Japan, a company can be charged with wrongdoing. A court date is still undecided as the prosecutors continue to question Ghosn and Kelly.

In a statement, Nissan said it takes the 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."

The statement said Nissan would work to improve its corporate governance and compliance, "including making accurate disclosures of corporate information."

Some kind of action by the prosecutors had been expected because the detention period allowed for the allegations disclosed earlier was to end on Monday.

The maximum penalty for violating Japan's financial laws, as the prosecutors allege, is 10 years in prison, a 10-million yen ($89,000) fine, or both.

Ghosn, a veteran of the auto industry, was arrested in Tokyo last month for alleged financial misconduct. (Takashi Aoyama/Getty Images)

Kelly, 62, is suspected of having collaborated with Ghosn. Kelly's attorney in the U.S. says he is asserting his innocence.

Ghosn has not commented.

Ghosn has been ousted as Nissan chairman and Kelly lost his representative director title, following their arrests, but they both remain on the board.

Ghosn, 64, was sent to Nissan by its partner Renault SA of France in 1999. He led a dramatic turnaround of the near-bankrupt Japanese automaker. But Ghosn's star-level pay drew attention since executives in Japan tend to be paid far less than their international counterparts.

Only Ghosn's lawyers and embassy officials from Lebanon, France and Brazil, where he has citizenship, have been allowed to visit him.

Shin Kukimoto, deputy chief prosecutor at the Tokyo District Prosecutor's Office, declined Monday to say if the suspects were rejecting the allegations. He said Ghosn and Kelly were being detained because they are considered flight risks.

He also denied that the two would be forced to make confessions. Japan's criminal justice system has been criticized for detaining people for long periods to pressure them to confess. The conviction rate for those charged is more than 99 percent.

"We do not have such a scenario. There is no such thing and we do not force suspects to make confessions to fit the story," Kukimoto said in response to a reporter's question.

Meanwhile, the Securities and Exchange Commission said it had filed criminal complaints against Ghosn, Nissan and Kelly. A commission official said Monday that Nissan, Ghosn and Kelly were suspected of falsifying reports on millions of dollars worth of Ghosn's income.