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Abu Dhabi, UAEThursday 13 December 2018

Ousted Nissan chairman Carlos Ghosn ‘arranged undisclosed retirement payout’  

The top executive's total undeclared amount could reach $71m, Tokyo prosecutors say

Carlos Ghosn, the former chairman of Nissan, as arrested last Sunday on allegations of financial misconduct.  AP Photo
Carlos Ghosn, the former chairman of Nissan, as arrested last Sunday on allegations of financial misconduct.  AP Photo

Carlos Ghosn, the former Nissan chairman arrested last week for allegedly under-reporting his earnings, had an arrangement in place to be paid the undisclosed earnings via a hefty retirement payout, according to Japanese media.

Under the agreement, the executive would have been paid around ¥8 billion (Dh261 million) after stepping down from his post, Japan’s state broadcaster NHK reported yesterday. Mr Ghosn was the head of the Japanese automaker since 1999 and is widely credited for turning it around from losses.

He was arrested last Sunday on suspicion of under-reporting his earnings by about $44m and using company resources to acquire homes in Amsterdam, Paris, Rio de Janeiro and Beirut, and to pay for family trips. A day later, Greg Kelly, a Nissan board member and former representative director at the car maker, was also arrested.

Tokyo prosecutors allege that the total undeclared amount could have been as high as $71m over an eight-year period, which equates to around ¥2 billion yen per year, according to NHK.

The broadcaster, citing unnamed sources, said that from 2010 Mr Ghosn reported his annual compensation as $9m fearing that news of a much higher income would draw criticism. Under Japanese law, publicly listed companies are required to disclose executive compensation totalling ¥100m yen or more.

The difference between the published income and actual compensation was set aside to be paid to him after retirement through an increase in his retirement bonus and through consulting contracts. Compensation to be paid after retirement requires disclosure under Japanese securities law, NHK noted.

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Read more:

Nissan board dismisses Carlos Ghosn as chairman

Shares of Nissan and Mitsubishi plunge following Ghosn arrest

Upheaval at Nissan looks more like a palace coup

Who is Carlos Ghosn?

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It was also reported on Sunday that Mr Kelly, who is suspected of instructing other aides to make false statements, said he properly handled payments for Mr Ghosn. Mr Kelly previously worked in Mr Ghosn’s chief executive office, but had no specific assignment for the last three years, according to the broadcaster. Mr Kelly has reportedly told prosecutors he will respond fully to the allegations after speaking with his lawyer.

After his arrest and subsequent dismissal as chairman on Thursday, Mr Ghosn’s role as chief executive of the Renault-Nissan-Mitsubishi Alliance hangs in the balance. He had said last month he planned to stay on until 2020, but stepped down as chief executive of Nissan last year amid reports that the

three car markers were considering restructuring the alliance through a possible merger.

Shares of Nissan and Mitsubishi plunged when the markets opened in Japan on Tuesday following Mr Ghosn’s arrest. Shares of Nissan, which is Japan’s second-largest car manufacturer, dropped as much as 6.5 per cent, while Mitsubishi shares slipped 6.9 per cent and Renault shares fell by as much as 4.8 per cent.

Mr Ghosn is suspected of other instances of financial misconduct, including retaining money intended for other company executives, and having Nissan’s Dutch subsidiary cover the $63,000 annual membership fees for a yacht club in Brazil, NHK reported.

That same subsidiary reportedly purchased luxury housing for Mr Ghosn’s personal use in Rio, Beirut and other cities across the world.

Mr Ghosn, a Brazilian-French citizen of Lebanese descent, was detained after turning himself in to prosecutors upon arriving at Japan’s Haneda airport on Monday night.

Mr Ghosn had developed a cult following and was known as “Mr Reformer of Nissan” or “saviour” in Japan. His detention has stunned most Japanese who now consider him “a bad gaijin (foreigner)”, one Japanese media executive told The National last week.